It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.
Lululemon Athletica inc. (NASDAQ:LULU) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. At the end of this article we will also compare LULU to other stocks including FactSet Research Systems Inc. (NYSE:FDS), Alliant Energy Corporation (NYSE:LNT), and AutoNation, Inc. (NYSE:AN) to get a better sense of its popularity.
Follow Lululemon Athletica Inc. (NASDAQ:LULU)
Follow Lululemon Athletica Inc. (NASDAQ:LULU)
Now, let’s take a peek at the recent action encompassing Lululemon Athletica inc. (NASDAQ:LULU).
What have hedge funds been doing with Lululemon Athletica inc. (NASDAQ:LULU)?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in Lululemon Athletica inc. (NASDAQ:LULU). Citadel Investment Group has a $167.4 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Point72 Asset Management, managed by Steve Cohen, which holds a $146 million position; 1.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions comprise Dmitry Balyasny’s Balyasny Asset Management, Alexander Mitchell’s Scopus Asset Management and Gabriel Plotkin’s Melvin Capital Management.
Judging by the fact that Lululemon Athletica inc. (NASDAQ:LULU) has faced falling interest from hedge fund managers, logic holds that there exists a select few money managers who were dropping their entire stakes in the third quarter. At the top of the heap, Edmond M. Safra’s EMS Capital said goodbye to the largest investment of the 700 funds tracked by Insider Monkey, worth about $19.6 million in stock, and John Burbank’s Passport Capital was right behind this move, as the fund said goodbye to about $17 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Lululemon Athletica inc. (NASDAQ:LULU). We will take a look at FactSet Research Systems Inc. (NYSE:FDS), Alliant Energy Corporation (NYSE:LNT), AutoNation, Inc. (NYSE:AN), and Duke Realty Corp (NYSE:DRE). This group of stocks’ market values match LULU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FDS | 24 | 169594 | 1 |
| LNT | 17 | 83714 | 3 |
| AN | 31 | 1345703 | -6 |
| DRE | 12 | 34731 | -4 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $408 million. That figure was $837 million in LULU’s case. AutoNation, Inc. (NYSE:AN) is the most popular stock in this table. On the other hand Duke Realty Corp (NYSE:DRE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Lululemon Athletica inc. (NASDAQ:LULU) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
