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At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Fossil Group Inc (NASDAQ:FOSL) makes for a good investment right now.
Is FOSL a good stock to buy now? Fossil Group Inc (NASDAQ:FOSL) was in 11 hedge funds' portfolios at the end of September. The all time high for this statistics is 29. FOSL investors should pay attention to an increase in hedge fund sentiment recently. There were 9 hedge funds in our database with FOSL positions at the end of the second quarter. Our calculations also showed that FOSL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most shareholders, hedge funds are perceived as underperforming, old investment vehicles of years past. While there are greater than 8000 funds in operation today, We choose to focus on the masters of this club, about 850 funds. These hedge fund managers oversee most of the hedge fund industry's total capital, and by following their matchless investments, Insider Monkey has spotted a number of investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Lee Ainslie of Maverick Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we're going to check out the recent hedge fund action surrounding Fossil Group Inc (NASDAQ:FOSL).
Do Hedge Funds Think FOSL Is A Good Stock To Buy Now?
At the end of September, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in FOSL a year ago. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Contrarius Investment Management was the largest shareholder of Fossil Group Inc (NASDAQ:FOSL), with a stake worth $25.1 million reported as of the end of September. Trailing Contrarius Investment Management was Renaissance Technologies, which amassed a stake valued at $7.4 million. D E Shaw, Arrowstreet Capital, and Maverick Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to Fossil Group Inc (NASDAQ:FOSL), around 2.19% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to FOSL.
As one would reasonably expect, key hedge funds have been driving this bullishness. Paloma Partners, managed by Donald Sussman, created the most valuable position in Fossil Group Inc (NASDAQ:FOSL). Paloma Partners had $0.4 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $0.1 million position during the quarter. The only other fund with a brand new FOSL position is Joel Greenblatt's Gotham Asset Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Fossil Group Inc (NASDAQ:FOSL) but similarly valued. We will take a look at Aspen Aerogels Inc (NYSE:ASPN), Lydall, Inc. (NYSE:LDL), CRA International, Inc. (NASDAQ:CRAI), Canaan Inc. (NASDAQ:CAN), Mercantile Bank Corp. (NASDAQ:MBWM), Ooma Inc (NYSE:OOMA), and Concert Pharmaceuticals Inc (NASDAQ:CNCE). This group of stocks' market values are similar to FOSL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASPN,5,18039,-2 LDL,12,48365,0 CRAI,12,31116,0 CAN,5,3819,2 MBWM,6,17611,-1 OOMA,15,83266,-2 CNCE,16,79858,3 Average,10.1,40296,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.1 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $46 million in FOSL's case. Concert Pharmaceuticals Inc (NASDAQ:CNCE) is the most popular stock in this table. On the other hand Aspen Aerogels Inc (NYSE:ASPN) is the least popular one with only 5 bullish hedge fund positions. Fossil Group Inc (NASDAQ:FOSL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FOSL is 45.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on FOSL as the stock returned 125.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.