We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Fossil Group Inc (NASDAQ:FOSL).
Fossil Group Inc (NASDAQ:FOSL) was in 18 hedge funds' portfolios at the end of the third quarter of 2019. FOSL has experienced an increase in support from the world's most elite money managers in recent months. There were 13 hedge funds in our database with FOSL positions at the end of the previous 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 below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most shareholders, hedge funds are viewed as worthless, old financial vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, Our experts choose to focus on the leaders of this club, around 750 funds. It is estimated that this group of investors direct most of the smart money's total capital, and by following their unrivaled investments, Insider Monkey has formulated several investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_256989" align="aligncenter" width="450"] Dmitry Balyasny of Balyasny Asset Managemnet[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's analyze the new hedge fund action encompassing Fossil Group Inc (NASDAQ:FOSL).
What does smart money think about Fossil Group Inc (NASDAQ:FOSL)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FOSL over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of Fossil Group Inc (NASDAQ:FOSL), with a stake worth $19.5 million reported as of the end of September. Trailing D E Shaw was Renaissance Technologies, which amassed a stake valued at $15.8 million. Balyasny Asset Management, Maverick Capital, and Arrowstreet 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 Teton Capital allocated the biggest weight to Fossil Group Inc (NASDAQ:FOSL), around 0.78% of its 13F portfolio. Scopia Capital is also relatively very bullish on the stock, earmarking 0.29 percent of its 13F equity portfolio to FOSL.
As aggregate interest increased, key hedge funds have jumped into Fossil Group Inc (NASDAQ:FOSL) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in Fossil Group Inc (NASDAQ:FOSL). Balyasny Asset Management had $8.5 million invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also made a $7 million investment in the stock during the quarter. The other funds with brand new FOSL positions are Quincy Lee's Teton Capital, Robert Pohly's Samlyn Capital, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Let's now review 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 Tidewater Inc. (NYSE:TDW), Malibu Boats Inc (NASDAQ:MBUU), Niu Technologies (NASDAQ:NIU), and Myers Industries, Inc. (NYSE:MYE). 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 TDW,17,145340,2 MBUU,20,81462,3 NIU,5,36234,-1 MYE,12,98711,-2 Average,13.5,90437,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $77 million in FOSL's case. Malibu Boats Inc (NASDAQ:MBUU) is the most popular stock in this table. On the other hand Niu Technologies (NASDAQ:NIU) 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FOSL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FOSL were disappointed as the stock returned -40.1% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.