Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) based on that data and determine whether they were really smart about the stock.
Is 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) a bargain? The smart money was becoming more confident. The number of long hedge fund bets went up by 4 in recent months. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) was in 23 hedge funds' portfolios at the end of June. The all time high for this statistics is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FLWS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 19 hedge funds in our database with FLWS positions at the end of the first quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Sander Gerber of Hudson Bay 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 precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now let's take a glance at the latest hedge fund action regarding 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS).
How are hedge funds trading 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS)?
Heading into the third quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FLWS over the last 20 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) was held by Shannon River Fund Management, which reported holding $22.1 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $12.5 million position. Other investors bullish on the company included GAMCO Investors, Renaissance Technologies, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Beddow Capital Management allocated the biggest weight to 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), around 3.28% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, designating 2.89 percent of its 13F equity portfolio to FLWS.
Now, key hedge funds were breaking ground themselves. Hudson Bay Capital Management, managed by Sander Gerber, assembled the most outsized position in 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS). Hudson Bay Capital Management had $4 million invested in the company at the end of the quarter. Josh Goldberg's G2 Investment Partners Management also initiated a $1.3 million position during the quarter. The other funds with new positions in the stock are Donald Sussman's Paloma Partners, Michael Gelband's ExodusPoint Capital, and John Horseman's Horseman Capital Management.
Let's now review hedge fund activity in other stocks similar to 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS). We will take a look at MAG Silver Corporation (NYSE:MAG), Delek US Holdings, Inc. (NYSE:DK), Red Rock Resorts, Inc. (NASDAQ:RRR), American Woodmark Corporation (NASDAQ:AMWD), CorVel Corporation (NASDAQ:CRVL), Azul S.A. (NYSE:AZUL), and The Macerich Company (NYSE:MAC). All of these stocks' market caps match FLWS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAG,10,85741,2 DK,20,235338,4 RRR,30,243581,5 AMWD,16,38103,5 CRVL,15,109671,3 AZUL,13,53616,5 MAC,20,75996,-1 Average,17.7,120292,3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $99 million in FLWS's case. Red Rock Resorts, Inc. (NASDAQ:RRR) is the most popular stock in this table. On the other hand MAG Silver Corporation (NYSE:MAG) is the least popular one with only 10 bullish hedge fund positions. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLWS is 71.5. 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 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 gained 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on FLWS as the stock returned 24.6% during Q3 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.