We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of Shoe Carnival, Inc. (NASDAQ:SCVL).
Is Shoe Carnival, Inc. (NASDAQ:SCVL) a buy here? Prominent investors are in a bearish mood. The number of bullish hedge fund positions shrunk by 2 in recent months. Our calculations also showed that SCVL isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
We're going to analyze the key hedge fund action regarding Shoe Carnival, Inc. (NASDAQ:SCVL).
What does the smart money think about Shoe Carnival, Inc. (NASDAQ:SCVL)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in SCVL a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Shoe Carnival, Inc. (NASDAQ:SCVL), with a stake worth $21.8 million reported as of the end of March. Trailing Royce & Associates was Arrowstreet Capital, which amassed a stake valued at $15.3 million. Citadel Investment Group, D E Shaw, and Winton Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Shoe Carnival, Inc. (NASDAQ:SCVL) has faced falling interest from the smart money, it's safe to say that there exists a select few fund managers that elected to cut their positions entirely in the third quarter. Interestingly, Dmitry Balyasny's Balyasny Asset Management sold off the largest position of all the hedgies monitored by Insider Monkey, totaling close to $4.5 million in stock, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital was right behind this move, as the fund dumped about $1 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Shoe Carnival, Inc. (NASDAQ:SCVL). These stocks are Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), Matrix Service Co (NASDAQ:MTRX), Heritage Commerce Corp. (NASDAQ:HTBK), and First Community Bankshares, Inc. (NASDAQ:FCBC). This group of stocks' market caps match SCVL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPRX,12,177932,2 MTRX,15,31874,-4 HTBK,7,21498,-2 FCBC,4,9920,1 Average,9.5,60306,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $94 million in SCVL's case. Matrix Service Co (NASDAQ:MTRX) is the most popular stock in this table. On the other hand First Community Bankshares, Inc. (NASDAQ:FCBC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Shoe Carnival, Inc. (NASDAQ:SCVL) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SCVL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SCVL were disappointed as the stock returned -21.6% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.