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Hedge Funds Are Buying Genesco Inc. (GCO)

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Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Even though Genesco Inc. (NYSE:GCO) stock has been on a downward trajectory since the beginning of the year, it has registered a slight increase in hedge fund interest during the third quarter and it was in 12 hedge funds’ portfolios at the end of September. However, 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 Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), CoreSite Realty Corp (NYSE:COR), and Dreamworks Animation Skg Inc (NASDAQ:DWA) to gather more data points.

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In the financial world there are several formulas investors use to assess their holdings. A pair of the most under-the-radar formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the broader indices by a healthy amount (see the details here).

Now, let’s take a look at the new action regarding Genesco Inc. (NYSE:GCO).

How have hedgies been trading Genesco Inc. (NYSE:GCO)?

Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 9% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Genesco Inc. (NYSE:GCO), worth close to $87 million, amounting to 0.5% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, holding a $7.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain Joel Greenblatt’s Gotham Asset Management, Israel Englander’s Millennium Management, and D. E. Shaw’s D E Shaw.

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