The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Fossil Group Inc (NASDAQ:FOSL).
Fossil Group Inc (NASDAQ:FOSL) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds' portfolios at the end of December. At the end of this article we will also compare FOSL to other stocks including Westlake Chemical Partners LP (NYSE:WLKP), FTS International, Inc. (NYSE:FTSI), and Puma Biotechnology Inc (NYSE:PBYI) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 market by 32 percentage points since May 2014 through March 12, 2019 (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.
Let's take a look at the latest hedge fund action regarding Fossil Group Inc (NASDAQ:FOSL).
How have hedgies been trading Fossil Group Inc (NASDAQ:FOSL)?
At the end of the fourth quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in FOSL a year ago. With the smart money's capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Fossil Group Inc (NASDAQ:FOSL), which was worth $20.3 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $15.6 million worth of shares. Moreover, AQR Capital Management, Gotham Asset Management, and Millennium Management were also bullish on Fossil Group Inc (NASDAQ:FOSL), allocating a large percentage of their portfolios to this stock.
Since Fossil Group Inc (NASDAQ:FOSL) has faced falling interest from the smart money, it's safe to say that there was a specific group of fund managers that elected to cut their positions entirely in the third quarter. Interestingly, Ken Griffin's Citadel Investment Group dumped the biggest investment of the "upper crust" of funds followed by Insider Monkey, valued at about $3.5 million in call options, and D. E. Shaw's D E Shaw was right behind this move, as the fund said goodbye to about $1.6 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to Fossil Group Inc (NASDAQ:FOSL). We will take a look at Westlake Chemical Partners LP (NYSE:WLKP), FTS International, Inc. (NYSE:FTSI), Puma Biotechnology Inc (NASDAQ:PBYI), and Meridian Bancorp, Inc. (NASDAQ:EBSB). This group of stocks' market caps are closest to FOSL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WLKP,1,1898,-2 FTSI,22,86133,1 PBYI,22,247828,0 EBSB,10,62764,-3 Average,13.75,99656,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $87 million in FOSL's case. FTS International, Inc. (NYSE:FTSI) is the most popular stock in this table. On the other hand Westlake Chemical Partners LP (NYSE:WLKP) is the least popular one with only 1 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately FOSL wasn't nearly as popular as these 15 stock and hedge funds that were betting on FOSL were disappointed as the stock returned -18.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.