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Did Hedge Funds Drop The Ball On Canada Goose Holdings Inc. (GOOS) ?

Is Canada Goose Holdings Inc. (NYSE:GOOS) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Canada Goose Holdings Inc. (NYSE:GOOS) an attractive investment now? The smart money is taking a pessimistic view. The number of bullish hedge fund bets decreased by 9 recently. Our calculations also showed that GOOS isn’t among the 30 most popular stocks among hedge funds (view the video below). GOOS was in 18 hedge funds’ portfolios at the end of June. There were 27 hedge funds in our database with GOOS positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

GOOS_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the new hedge fund action encompassing Canada Goose Holdings Inc. (NYSE:GOOS).

What have hedge funds been doing with Canada Goose Holdings Inc. (NYSE:GOOS)?

Heading into the third quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in GOOS over the last 16 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Dmitry Balyasny

More specifically, Select Equity Group was the largest shareholder of Canada Goose Holdings Inc. (NYSE:GOOS), with a stake worth $27 million reported as of the end of March. Trailing Select Equity Group was Kylin Management, which amassed a stake valued at $25.4 million. Citadel Investment Group, Balyasny Asset Management, and Armistice Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Because Canada Goose Holdings Inc. (NYSE:GOOS) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedgies who sold off their positions entirely heading into Q3. It’s worth mentioning that Gabriel Plotkin’s Melvin Capital Management cut the largest stake of the 750 funds followed by Insider Monkey, worth about $22.8 million in stock. Robert B. Gillam’s fund, McKinley Capital Management, also dropped its stock, about $20.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 9 funds heading into Q3.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Canada Goose Holdings Inc. (NYSE:GOOS) but similarly valued. These stocks are Evertec Inc (NYSE:EVTC), Quidel Corporation (NASDAQ:QDEL), National Vision Holdings, Inc. (NASDAQ:EYE), and Core Laboratories N.V. (NYSE:CLB). This group of stocks’ market valuations match GOOS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EVTC 22 307810 1
QDEL 14 91509 -4
EYE 21 415880 5
CLB 21 244121 6
Average 19.5 264830 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $109 million in GOOS’s case. Evertec Inc (NYSE:EVTC) is the most popular stock in this table. On the other hand Quidel Corporation (NASDAQ:QDEL) is the least popular one with only 14 bullish hedge fund positions. Canada Goose Holdings Inc. (NYSE:GOOS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on GOOS as the stock returned 13.5% during the same time frame and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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