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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 third 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 Shoe Carnival, Inc. (NASDAQ:SCVL) based on that data.
Is SCVL a good stock to buy now? The smart money was taking a bullish view. The number of long hedge fund bets increased by 8 recently. Shoe Carnival, Inc. (NASDAQ:SCVL) was in 19 hedge funds' portfolios at the end of September. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SCVL 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). There were 11 hedge funds in our database with SCVL holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 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 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. Now let's check out the recent hedge fund action surrounding Shoe Carnival, Inc. (NASDAQ:SCVL).
Do Hedge Funds Think SCVL Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 73% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SCVL over the last 21 quarters. So, let's review 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 $28 million reported as of the end of September. Trailing Royce & Associates was Arrowstreet Capital, which amassed a stake valued at $10.7 million. Balyasny Asset Management, Renaissance Technologies, and Marshall Wace LLP 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 Royce & Associates allocated the biggest weight to Shoe Carnival, Inc. (NASDAQ:SCVL), around 0.3% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to SCVL.
As one would reasonably expect, key money managers have jumped into Shoe Carnival, Inc. (NASDAQ:SCVL) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in Shoe Carnival, Inc. (NASDAQ:SCVL). Marshall Wace LLP had $1.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $1.1 million investment in the stock during the quarter. The other funds with brand new SCVL positions are Peter Muller's PDT Partners, Michael Gelband's ExodusPoint Capital, and Matthew Hulsizer's PEAK6 Capital Management.
Let's check out hedge fund activity in other stocks similar to Shoe Carnival, Inc. (NASDAQ:SCVL). These stocks are Dynavax Technologies Corporation (NASDAQ:DVAX), HarborOne Bancorp, Inc. (NASDAQ:HONE), Talos Energy, Inc. (NYSE:TALO), Ardelyx Inc (NASDAQ:ARDX), Navigator Holdings Ltd (NYSE:NVGS), Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), and AxoGen, Inc. (NASDAQ:AXGN). 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 DVAX,23,58102,6 HONE,14,26950,1 TALO,8,18051,-6 ARDX,21,180194,-3 NVGS,16,30119,2 CCO,30,121256,3 AXGN,15,43436,3 Average,18.1,68301,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $50 million in SCVL's case. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is the most popular stock in this table. On the other hand Talos Energy, Inc. (NYSE:TALO) is the least popular one with only 8 bullish hedge fund positions. Shoe Carnival, Inc. (NASDAQ:SCVL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SCVL is 65. 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. 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 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 beat the market again by 15.8 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 6.1% since the end of September (through 12/14) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.