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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Canada Goose Holdings Inc. (NYSE:GOOS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Canada Goose Holdings Inc. (NYSE:GOOS) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that GOOS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Madison Square Garden Sports Corp. (NYSE:MSGS), Avient Corporation (NYSE:AVNT), and Wintrust Financial Corporation (NASDAQ:WTFC) to gather more data points.
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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
David E. Shaw of D.E. Shaw
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to check out the fresh hedge fund action regarding Canada Goose Holdings Inc. (NYSE:GOOS).
Do Hedge Funds Think GOOS Is A Good Stock To Buy Now?
At Q1's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2020. By comparison, 26 hedge funds held shares or bullish call options in GOOS a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Canada Goose Holdings Inc. (NYSE:GOOS) was held by Miller Value Partners, which reported holding $70.8 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $60.9 million position. Other investors bullish on the company included D E Shaw, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Miller Value Partners allocated the biggest weight to Canada Goose Holdings Inc. (NYSE:GOOS), around 1.83% of its 13F portfolio. Tairen Capital is also relatively very bullish on the stock, earmarking 0.86 percent of its 13F equity portfolio to GOOS.
Since Canada Goose Holdings Inc. (NYSE:GOOS) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there were a few money managers that decided to sell off their positions entirely last quarter. Intriguingly, Chuck Royce's Royce & Associates said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, valued at about $16.9 million in stock, and Quincy Lee's Ancient Art (Teton Capital) was right behind this move, as the fund cut about $11 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Canada Goose Holdings Inc. (NYSE:GOOS). We will take a look at Madison Square Garden Sports Corp. (NYSE:MSGS), Avient Corporation (NYSE:AVNT), Wintrust Financial Corporation (NASDAQ:WTFC), Innovative Industrial Properties, Inc. (NYSE:IIPR), Antero Midstream Corp (NYSE:AM), Armstrong World Industries, Inc. (NYSE:AWI), and Healthcare Realty Trust Inc (NYSE:HR). This group of stocks' market values are closest to GOOS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MSGS,47,934404,3 AVNT,24,232031,7 WTFC,19,176919,0 IIPR,13,192649,-10 AM,17,123037,-2 AWI,25,511972,-6 HR,20,172535,-3 Average,23.6,334792,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $208 million in GOOS's case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Innovative Industrial Properties, Inc. (NYSE:IIPR) is the least popular one with only 13 bullish hedge fund positions. Canada Goose Holdings Inc. (NYSE:GOOS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GOOS is 33.5. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately GOOS wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GOOS investors were disappointed as the stock returned 1.1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.