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Shoe Carnival, Inc. (SCVL): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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Shoe Carnival, Inc. (NASDAQ:SCVL) was in 6 hedge funds’ portfolio at the end of the first quarter of 2013. SCVL investors should be aware of an increase in enthusiasm from smart money in recent months. There were 5 hedge funds in our database with SCVL positions at the end of the previous quarter.

In the eyes of most traders, hedge funds are viewed as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at the moment, we at Insider Monkey hone in on the masters of this group, close to 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total asset base, and by paying attention to their best picks, we have figured out a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as beneficial, bullish insider trading activity is another way to break down the stock market universe. Just as you’d expect, there are plenty of reasons for an insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this tactic if you understand what to do (learn more here).

With all of this in mind, let’s take a glance at the key action surrounding Shoe Carnival, Inc. (NASDAQ:SCVL).

What does the smart money think about Shoe Carnival, Inc. (NASDAQ:SCVL)?

In preparation for this quarter, a total of 6 of the hedge funds we track were bullish in this stock, a change of 20% 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 holdings meaningfully.

Shoe Carnival Inc. (SCVL)Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Shoe Carnival, Inc. (NASDAQ:SCVL), worth close to $62.7 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Archon Capital Management, managed by Constantinos J. Christofilis, which held a $7.5 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include John Overdeck and David Siegel’s Two Sigma Advisors, Mark N. Diker’s Diker Management and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the biggest position in Shoe Carnival, Inc. (NASDAQ:SCVL). Two Sigma Advisors had 0.6 million invested in the company at the end of the quarter. Mark N. Diker’s Diker Management also made a $0.5 million investment in the stock during the quarter. The only other fund with a brand new SCVL position is Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Insider trading activity in Shoe Carnival, Inc. (NASDAQ:SCVL)

Insider buying is best served when the company in focus has seen transactions within the past six months. Over the last six-month time period, Shoe Carnival, Inc. (NASDAQ:SCVL) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Shoe Carnival, Inc. (NASDAQ:SCVL). These stocks are Hot Topic, Inc. (NASDAQ:HOTT), Destination Maternity Corp (NASDAQ:DEST), bebe stores, inc. (NASDAQ:BEBE), Tilly’s Inc (NYSE:TLYS), and Stein Mart, Inc. (NASDAQ:SMRT). This group of stocks belong to the apparel stores industry and their market caps are closest to SCVL’s market cap.

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