Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Levi Strauss & Co. (NYSE:LEVI).
Is Levi Strauss & Co. (NYSE:LEVI) a healthy stock for your portfolio? The best stock pickers were turning less bullish. The number of bullish hedge fund positions dropped by 2 in recent months. Levi Strauss & Co. (NYSE:LEVI) was in 19 hedge funds' portfolios at the end of March. 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 Q1 rankings).
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
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. With all of this in mind let's review the latest hedge fund action encompassing Levi Strauss & Co. (NYSE:LEVI).
Do Hedge Funds Think LEVI Is A Good Stock To Buy Now?
At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LEVI over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Select Equity Group held the most valuable stake in Levi Strauss & Co. (NYSE:LEVI), which was worth $160.4 million at the end of the fourth quarter. On the second spot was Royce & Associates which amassed $32.1 million worth of shares. Two Sigma Advisors, Citadel Investment Group, and Citadel Investment Group 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 Venator Capital Management allocated the biggest weight to Levi Strauss & Co. (NYSE:LEVI), around 1.41% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, dishing out 0.94 percent of its 13F equity portfolio to LEVI.
Since Levi Strauss & Co. (NYSE:LEVI) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of fund managers that elected to cut their full holdings by the end of the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the largest position of the "upper crust" of funds followed by Insider Monkey, comprising an estimated $6.4 million in stock, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund sold off about $3.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks similar to Levi Strauss & Co. (NYSE:LEVI). These stocks are Melco Resorts & Entertainment Limited (NASDAQ:MLCO), Upstart Holdings, Inc. (NASDAQ:UPST), Lamar Advertising Company (NASDAQ:LAMR), AECOM (NYSE:ACM), Continental Resources, Inc. (NYSE:CLR), NiSource Inc. (NYSE:NI), and Kohl's Corporation (NYSE:KSS). All of these stocks' market caps match LEVI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MLCO,29,728338,-1 UPST,13,1798914,-2 LAMR,35,427242,-1 ACM,38,1005485,1 CLR,23,154016,-6 NI,28,268051,5 KSS,35,1417821,-5 Average,28.7,828552,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $829 million. That figure was $253 million in LEVI's case. AECOM (NYSE:ACM) is the most popular stock in this table. On the other hand Upstart Holdings, Inc. (NASDAQ:UPST) is the least popular one with only 13 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 37.8. 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 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 beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on LEVI, though not to the same extent, as the stock returned 17% since the end of Q1 (through July 16th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.