Have Hedge Funds Found A Big Winner in Express, Inc. (EXPR)?

The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Express, Inc. (NYSE:EXPR) from the perspective of those elite funds.

Is Express, Inc. (NYSE:EXPR) a splendid stock to buy now? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets increased by 3 lately. At the end of this article we will also compare EXPR to other stocks including Seres Therapeutics Inc (NASDAQ:MCRB), Spartan Stores, Inc. (NASDAQ:SPTN), and CVR Refining LP (NYSE:CVRR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Hedge fund activity in Express, Inc. (NYSE:EXPR)

At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, up by 13% from the previous quarter, as ownership of EXPR among hedgies remains volatile. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Alexander Medina Seaver’s Stadium Capital Management has the biggest position in Express, Inc. (NYSE:EXPR), worth close to $20.6 million, amounting to 6.6% of its total 13F portfolio. On Stadium Capital Management’s heels is Steve Cohen of Point72 Asset Management, with a $19.8 million position. Other hedge funds and institutional investors that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management, and John Tompkins’ Tyvor Capital.

Now, specific money managers were breaking ground themselves. Melvin Capital Management, run by Gabriel Plotkin, established the largest call options position in Express, Inc. (NYSE:EXPR). The fund reportedly had $10.6 million invested in the position at the end of the third quarter. Steven Tananbaum’s GoldenTree Asset Management also made a $6.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Marc Majzner’s Clearline Capital, Neil Chriss’ Hutchin Hill Capital, and Sheetal Duggal’s Thrax Management.

Let’s now review hedge fund activity in other stocks similar to Express, Inc. (NYSE:EXPR). These stocks are Seres Therapeutics Inc (NASDAQ:MCRB), Spartan Stores, Inc. (NASDAQ:SPTN), CVR Refining LP (NYSE:CVRR), and Cynosure, Inc. (NASDAQ:CYNO). This group of stocks’ market valuations resemble EXPR’s market valuation.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $163 million in EXPR’s case. Cynosure, Inc. (NASDAQ:CYNO) is the most popular stock in this table. On the other hand CVR Refining LP (NYSE:CVRR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Express, Inc. (NYSE:EXPR) 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.

Disclosure: None