Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Guess', Inc. (NYSE:GES).
Guess', Inc. (NYSE:GES) has seen a decrease in enthusiasm from smart money of late. GES was in 16 hedge funds' portfolios at the end of March. There were 20 hedge funds in our database with GES holdings at the end of the previous quarter. Our calculations also showed that GES isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
According to most traders, hedge funds are assumed to be underperforming, outdated investment tools of the past. While there are more than 8000 funds trading at present, We hone in on the elite of this club, about 850 funds. These investment experts orchestrate most of the smart money's total capital, and by tailing their unrivaled stock picks, Insider Monkey has uncovered many investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_30602" align="aligncenter" width="392"] Philippe Laffont of Coatue Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to analyze the recent hedge fund action regarding Guess', Inc. (NYSE:GES).
What have hedge funds been doing with Guess', Inc. (NYSE:GES)?
Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GES over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Guess', Inc. (NYSE:GES) was held by D E Shaw, which reported holding $11.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $6.9 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to Guess', Inc. (NYSE:GES), around 0.36% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, setting aside 0.15 percent of its 13F equity portfolio to GES.
Because Guess', Inc. (NYSE:GES) has witnessed bearish sentiment from the smart money, we can see that there exists a select few hedgies that elected to cut their full holdings last quarter. Intriguingly, Alexander Mitchell's Scopus Asset Management dropped the biggest stake of the "upper crust" of funds followed by Insider Monkey, valued at an estimated $43.6 million in stock, and Richard Mashaal's Rima Senvest Management was right behind this move, as the fund cut about $9.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 4 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Guess', Inc. (NYSE:GES). We will take a look at Summit Hotel Properties Inc (NYSE:INN), Ranpak Holdings Corp (NYSE:PACK), Foundation Building Materials, Inc. (NYSE:FBM), and ArcBest Corp (NASDAQ:ARCB). This group of stocks' market valuations match GES's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INN,12,8543,-3 PACK,14,253601,-3 FBM,12,44726,-9 ARCB,11,41768,-2 Average,12.25,87160,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $31 million in GES's case. Ranpak Holdings Corp (NYSE:PACK) is the most popular stock in this table. On the other hand ArcBest Corp (NASDAQ:ARCB) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Guess', Inc. (NYSE:GES) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on GES as the stock returned 38.4% so far in Q2 (through June 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.