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This Metric Says You Are Smart to Buy G-III Apparel Group, Ltd. (NASDAQ:GIII)

G-III Apparel Group, Ltd. (NASDAQ:GIII) has seen an increase in enthusiasm from smart money recently.

G-III Apparel Group, Ltd. (NASDAQ:GIII)If you’d ask most traders, hedge funds are seen as underperforming, old investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, we look at the aristocrats of this group, around 450 funds. It is estimated that this group has its hands on the majority of all hedge funds’ total capital, and by watching their best picks, we have found a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per 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 outpaced the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Equally as beneficial, bullish insider trading sentiment is another way to break down the marketplace. As the old adage goes: there are a variety of stimuli for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand where to look (learn more here).

Now, it’s important to take a glance at the key action regarding G-III Apparel Group, Ltd. (NASDAQ:GIII).

How are hedge funds trading G-III Apparel Group, Ltd. (NASDAQ:GIII)?

In preparation for this year, a total of 14 of the hedge funds we track were bullish in this stock, a change of 27% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably.

Of the funds we track, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the biggest position in G-III Apparel Group, Ltd. (NASDAQ:GIII). Scopia Capital has a $67 million position in the stock, comprising 2.7% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $63 million position; 0% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include David Keidan’s Buckingham Capital Management, Donald Chiboucis’s Columbus Circle Investors and Joel Greenblatt’s Gotham Asset Management.

Consequently, key hedge funds were leading the bulls’ herd. AQR Capital Management, managed by Cliff Asness, assembled the largest position in G-III Apparel Group, Ltd. (NASDAQ:GIII). AQR Capital Management had 2 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $1 million position during the quarter. The other funds with brand new GIII positions are Steven Cohen’s SAC Capital Advisors, Paul Tudor Jones’s Tudor Investment Corp, and Bruce Kovner’s Caxton Associates LP.

What do corporate executives and insiders think about G-III Apparel Group, Ltd. (NASDAQ:GIII)?

Bullish insider trading is particularly usable when the company in focus has seen transactions within the past 180 days. Over the latest six-month time frame, G-III Apparel Group, Ltd. (NASDAQ:GIII) has experienced 1 unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to G-III Apparel Group, Ltd. (NASDAQ:GIII). These stocks are Oxford Industries, Inc. (NYSE:OXM), True Religion Apparel, Inc. (NASDAQ:TRLG), Quiksilver, Inc. (NYSE:ZQK), Maidenform Brands, Inc. (NYSE:MFB), and UniFirst Corp (NYSE:UNF). This group of stocks belong to the textile – apparel clothing industry and their market caps are similar to GIII’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Oxford Industries, Inc. (NYSE:OXM) 5 2 3
True Religion Apparel, Inc. (NASDAQ:TRLG) 13 0 0
Quiksilver, Inc. (NYSE:ZQK) 8 0 2
Maidenform Brands, Inc. (NYSE:MFB) 8 0 4
UniFirst Corp (NYSE:UNF) 9 0 4

With the results exhibited by our time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and G-III Apparel Group, Ltd. (NASDAQ:GIII) applies perfectly to this mantra.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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