Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
DSW Inc. (NYSE:DSW) was in 29 hedge funds’ portfolios at the end of September. DSW Inc. (NYSE:DSW) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 36 hedge funds in our database with DSW Inc. (NYSE:DSW) holdings at the end of the previous quarter. 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 INC Research Holdings Inc (NASDAQ:INCR), Steelcase Inc. (NYSE:SCS), and Dril-Quip, Inc. (NYSE:DRQ) to gather more data points.
Today, there are a multitude of tools stock traders can use to appraise stocks. Two of the most innovative tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top fund managers can trounce their index-focused peers by a healthy amount (see the details here).
Keeping this in mind, let’s take a glance at the latest action regarding DSW Inc. (NYSE:DSW).
What does the smart money think about DSW Inc. (NYSE:DSW)?
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 19% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in DSW Inc. (NYSE:DSW). Royce & Associates has a $63.3 million position in the stock, comprising 0.3% of its 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, which holds a $25.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Gilchrist Berg’s Water Street Capital, D E Shaw, and Joel Greenblatt’s Gotham Asset Management.