The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded The Children’s Place Inc. (NASDAQ:PLCE) based on those filings.
The Children’s Place Inc. (NASDAQ:PLCE) investors should be aware of a decrease in enthusiasm from smart money lately. PLCE was in 18 hedge funds’ portfolios at the end of the first quarter of 2020. There were 25 hedge funds in our database with PLCE positions at the end of the previous quarter. Our calculations also showed that PLCE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, Our researchers look at the upper echelon of this club, approximately 850 funds. These hedge fund managers handle bulk of the hedge fund industry’s total capital, and by tracking their top picks, Insider Monkey has come up with a few investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the new hedge fund action encompassing The Children’s Place Inc. (NASDAQ:PLCE).
How are hedge funds trading The Children’s Place Inc. (NASDAQ:PLCE)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -28% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in PLCE a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Greenvale Capital was the largest shareholder of The Children’s Place Inc. (NASDAQ:PLCE), with a stake worth $25.6 million reported as of the end of September. Trailing Greenvale Capital was Royce & Associates, which amassed a stake valued at $15.1 million. Renaissance Technologies, Prentice Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to The Children’s Place Inc. (NASDAQ:PLCE), around 6.73% of its 13F portfolio. Prentice Capital Management is also relatively very bullish on the stock, designating 4.06 percent of its 13F equity portfolio to PLCE.
Since The Children’s Place Inc. (NASDAQ:PLCE) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few funds who were dropping their full holdings heading into Q4. Interestingly, Andrew Kurita’s Kettle Hill Capital Management sold off the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $12.2 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund cut about $1.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 7 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Children’s Place Inc. (NASDAQ:PLCE) but similarly valued. These stocks are Nantkwest Inc (NASDAQ:NK), MacroGenics Inc (NASDAQ:MGNX), UFP Technologies, Inc. (NASDAQ:UFPT), and Independent Bank Corporation (NASDAQ:IBCP). This group of stocks’ market valuations resemble PLCE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NK | 4 | 6187 | -3 |
| MGNX | 16 | 34052 | -1 |
| UFPT | 9 | 42454 | -1 |
| IBCP | 12 | 26713 | -1 |
| Average | 10.25 | 27352 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $94 million in PLCE’s case. MacroGenics Inc (NASDAQ:MGNX) is the most popular stock in this table. On the other hand Nantkwest Inc (NASDAQ:NK) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks The Children’s Place Inc. (NASDAQ:PLCE) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on PLCE as the stock returned 97.6% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Childrens Place Inc. (NASDAQ:PLCE)
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Disclosure: None. This article was originally published at Insider Monkey.
