Why Is American Eagle Outfitters (AEO) Trading Lower on Thursday?

How are hedge funds trading American Eagle Outfitters (NYSE:AEO)?

According to Insider Monkey’s hedge fund database, Royce & Associates, managed by Chuck Royce, holds the biggest position in American Eagle Outfitters (NYSE:AEO), which was valued at $71.2 million at the end of September, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Columbus Circle Investors, led by Clifford Fox, holding a $60.3 million position; 0.5% of its 13F portfolio is allocated to the company. Moreover, Cliff Asness’ AQR Capital Management, Joseph A. Jolson’s Harvest Capital Strategies, and Lee Munder’s Lee Munder Capital Group also reported significant positions in the stock in their latest 13F filing.

Moreover, since the company registered an increase in popularity, a number of funds have initiated long positions. Buckingham Capital Management, managed by David Keidan, opened the most outsized position in American Eagle Outfitters (NYSE:AEO), worth $24.9 million, followed by  David Harding’s Winton Capital Management, with a new $14.8 million stake. The following funds were also among the new AEO investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Louis Bacon’s Moore Global Investments, and Jerome Debs’s Bodri Capital Management.

Let’s now review hedge fund activity in other stocks that are similar to American Eagle Outfitters (NYSE:AEO) in terms of market cap, specifically These stocks are Industrias Bachoco, S.A.B. de C.V. (ADR) (NYSE:IBA), TC Pipelines, LP (NYSE:TCP), RR Donnelley & Sons Co (NASDAQ:RRD), and FEI Company (NASDAQ:FEIC).

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. As you can see, more hedge funds held shares of American Eagle Outfitters than the most popular stock in this table, RRD. In addition, the funds from our database have amassed $494 million worth of its stock heading into Q4 and held over 16% of the company’s outstanding stock. This suggests that smart money is bullish on American Eagle Outfitters and despite today’s decline, the stock is likely to post solid gains over the medium- to long-term.

Disclosure: none