Is Lululemon Athletica Inc. (LULU) A Good Stock To Buy Right Now?

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Judging by the fact that Lululemon Athletica inc. (NASDAQ:LULU) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds that slashed their positions entirely in the third quarter. Interestingly, Principal Global Investors’s Columbus Circle Investors said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, worth about $30.6 million in call options.. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its call options., about $28 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Lululemon Athletica inc. (NASDAQ:LULU). We will take a look at Verisign, Inc. (NASDAQ:VRSN), Tripadvisor Inc (NASDAQ:TRIP), Ingredion Inc (NYSE:INGR), and KeyCorp (NYSE:KEY). This group of stocks’ market valuations are closest to LULU’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VRSN 26 2169028 -4
TRIP 40 853214 7
INGR 23 406753 5
KEY 42 727656 -4

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.04 billion. That figure was $679 million in LULU’s case. KeyCorp (NYSE:KEY) is the most popular stock in this table. On the other hand Ingredion Inc (NYSE:INGR) is the least popular one with only 23 bullish hedge fund positions. Lululemon Athletica inc. (NASDAQ:LULU) is not the least popular stock in this group but hedge fund interest is still relatively small. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KEY might be a better candidate to consider a long position.

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