Hedge Funds Detecting A Sweeter Scent From 1-800-FLOWERS.COM Inc (FLWS)

The successful 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 1-800-FLOWERS.COM Inc (NASDAQ:FLWS) from the perspective of those successful funds.

1-800-FLOWERS.COM Inc (NASDAQ:FLWS) was in 14 hedge funds’ portfolios at the end of September. FLWS investors should pay attention to an increase in support from the world’s most successful money managers lately. There were 13 hedge funds in our database with FLWS positions at the end of the previous quarter. At the end of this article we will also compare FLWS to other stocks including Qiwi PLC (NASDAQ:QIWI), Rayonier Advanced Materials Inc (NYSE:RYAM), and Virtus Investment Partners Inc (NASDAQ:VRTS) 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.

What does the smart money think about 1-800-FLOWERS.COM Inc (NASDAQ:FLWS)?

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FLWS over the last 5 quarters, which spiked earlier this year, but has retreated since. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Beddow Capital Management, led by Ed Beddow and William Tichy, holds the largest position in 1-800-FLOWERS.COM Inc (NASDAQ:FLWS). Beddow Capital Management has a $7.4 million position in the stock, comprising 3% of its 13F portfolio. The second largest stake is held by GAMCO Investors, led by Mario Gabelli, holding a $6 million position. Some other peers that are bullish consist of Martin Whitman’s Third Avenue Management, David E. Shaw’s D E Shaw, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As one would reasonably expect, key hedge funds have jumped into 1-800-FLOWERS.COM Inc (NASDAQ:FLWS) headfirst. Beddow Capital Management assembled the most outsized position in 1-800-FLOWERS.COM Inc (NASDAQ:FLWS). Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new FLWS investors: Dmitry Balyasny’s Balyasny Asset Management and Chao Ku’s Nine Chapters Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as 1-800-FLOWERS.COM Inc (NASDAQ:FLWS) but similarly valued. These stocks are Qiwi PLC (NASDAQ:QIWI), Rayonier Advanced Materials Inc (NYSE:RYAM), Virtus Investment Partners Inc (NASDAQ:VRTS), and CTS Corporation (NYSE:CTS). All of these stocks’ market caps are similar to FLWS’s market cap.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $34 million in FLWS’s case. Rayonier Advanced Materials Inc (NYSE:RYAM) is the most popular stock in this table. On the other hand CTS Corporation (NYSE:CTS) is the least popular one with only 4 bullish hedge fund positions. 1-800-FLOWERS.COM Inc (NASDAQ:FLWS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RYAM might be a better candidate to consider taking a long position in.

Disclosure: None