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Should You Avoid Quiksilver, Inc. (ZQK)?

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Quiksilver, Inc. (NYSE:ZQK) was in 8 hedge funds’ portfolio at the end of the fourth quarter of 2012. ZQK investors should pay attention to a decrease in support from the world’s most elite money managers of late. There were 8 hedge funds in our database with ZQK holdings at the end of the previous quarter.

Quiksilver, Inc. (NYSE:ZQK)

According to most traders, hedge funds are seen as unimportant, outdated investment vehicles of the past. While there are more than 8000 funds trading at present, we at Insider Monkey hone in on the crème de la crème of this club, around 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total asset base, and by monitoring their best equity investments, we have identified a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Just as beneficial, optimistic insider trading activity is a second way to parse down the world of equities. Obviously, there are many reasons for a bullish insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).

With these “truths” under our belt, let’s take a peek at the latest action regarding Quiksilver, Inc. (NYSE:ZQK).

Hedge fund activity in Quiksilver, Inc. (NYSE:ZQK)

At the end of the fourth quarter, a total of 8 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially.

According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Quiksilver, Inc. (NYSE:ZQK). Royce & Associates has a $9.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates’s heels is Lisa Rapuano of Lane Five Capital, with a $5 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Ward Davis and Brian Agnew’s Caerus Global Investors, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Quiksilver, Inc. (NYSE:ZQK) has faced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that David Costen Haley’s HBK Investments sold off the biggest investment of the “upper crust” of funds we track, totaling about $0.3 million in stock., and Whitney Tilson of T2 Partners was right behind this move, as the fund said goodbye to about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Quiksilver, Inc. (NYSE:ZQK)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time period, Quiksilver, Inc. (NYSE:ZQK) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Quiksilver, Inc. (NYSE:ZQK). These stocks are Columbia Sportswear Company (NASDAQ:COLM), UniFirst Corp (NYSE:UNF), True Religion Apparel, Inc. (NASDAQ:TRLG), G-III Apparel Group, Ltd. (NASDAQ:GIII), and Oxford Industries, Inc. (NYSE:OXM). All of these stocks are in the textile – apparel clothing industry and their market caps match ZQK’s market cap.

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