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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Levi Strauss & Co. (NYSE:LEVI).
Is LEVI a good stock to buy now? Levi Strauss & Co. (NYSE:LEVI) investors should pay attention to an increase in enthusiasm from smart money recently. Levi Strauss & Co. (NYSE:LEVI) was in 17 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. Our calculations also showed that LEVI isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 S&P 500 ETFs by 66 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.
Ken Griffin of Citadel Investment Group
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we're going to review the new hedge fund action regarding Levi Strauss & Co. (NYSE:LEVI).
Do Hedge Funds Think LEVI Is A Good Stock To Buy Now?
At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LEVI over the last 21 quarters. 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, Millennium Management was the largest shareholder of Levi Strauss & Co. (NYSE:LEVI), with a stake worth $11 million reported as of the end of September. Trailing Millennium Management was Royce & Associates, which amassed a stake valued at $9.7 million. Cinctive Capital Management, Citadel Investment Group, and SRS Investment Management 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 Cinctive Capital Management allocated the biggest weight to Levi Strauss & Co. (NYSE:LEVI), around 0.38% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, dishing out 0.19 percent of its 13F equity portfolio to LEVI.
Now, specific money managers were leading the bulls' herd. Cinctive Capital Management, managed by Richard SchimeláandáLawrence Sapanski, created the largest position in Levi Strauss & Co. (NYSE:LEVI). Cinctive Capital Management had $4.4 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $1.8 million investment in the stock during the quarter. The following funds were also among the new LEVI investors: Gregg Moskowitz's Interval Partners, Steve Cohen's Point72 Asset Management, and Mika Toikka's AlphaCrest Capital Management.
Let's also examine hedge fund activity in other stocks similar to Levi Strauss & Co. (NYSE:LEVI). These stocks are CDK Global Inc (NASDAQ:CDK), ServiceMaster Global Holdings Inc (NYSE:SERV), Phillips 66 Partners LP (NYSE:PSXP), Thor Industries, Inc. (NYSE:THO), Aegon N.V. (NYSE:AEG), Allogene Therapeutics, Inc. (NASDAQ:ALLO), and Hyatt Hotels Corporation (NYSE:H). This group of stocks' market caps resemble LEVI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDK,28,324989,-4 SERV,30,626002,-5 PSXP,4,13182,-2 THO,39,274230,0 AEG,3,11800,-1 ALLO,21,248617,-3 H,26,574829,-1 Average,21.6,296236,-2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $296 million. That figure was $51 million in LEVI's case. Thor Industries, Inc. (NYSE:THO) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 3 bullish hedge fund positions. Levi Strauss & Co. (NYSE:LEVI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LEVI is 45.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on LEVI as the stock returned 51.7% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.