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Did Hedge Funds Drop The Ball On Chico’s FAS, Inc. (CHS) ?

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Chico’s FAS, Inc. (NYSE:CHS).

Chico’s FAS, Inc. (NYSE:CHS) was in 13 hedge funds’ portfolios at the end of June. CHS investors should pay attention to a decrease in hedge fund interest of late. There were 15 hedge funds in our database with CHS holdings at the end of the previous quarter. Our calculations also showed that CHS isn’t among the 30 most popular stocks among hedge funds (see the video below).
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In the eyes of most traders, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation today, Our experts look at the upper echelon of this group, approximately 750 funds. These hedge fund managers preside over bulk of the hedge fund industry’s total capital, and by tailing their highest performing investments, Insider Monkey has unsheathed a few investment strategies that have historically surpassed the market. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Bill Miller

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. Let’s take a glance at the key hedge fund action surrounding Chico’s FAS, Inc. (NYSE:CHS).

What have hedge funds been doing with Chico’s FAS, Inc. (NYSE:CHS)?

At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in CHS a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

No of Hedge Funds with CHS Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the number one position in Chico’s FAS, Inc. (NYSE:CHS). Renaissance Technologies has a $22.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $8.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish contain Bill Miller’s Miller Value Partners, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.

Due to the fact that Chico’s FAS, Inc. (NYSE:CHS) has experienced declining sentiment from the smart money, it’s safe to say that there exists a select few funds that decided to sell off their entire stakes last quarter. Interestingly, David Costen Haley’s HBK Investments sold off the largest investment of the 750 funds followed by Insider Monkey, comprising close to $1.3 million in stock, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital was right behind this move, as the fund dumped about $1.2 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chico’s FAS, Inc. (NYSE:CHS) but similarly valued. These stocks are Spartan Motors Inc (NASDAQ:SPAR), Evolus, Inc. (NASDAQ:EOLS), Village Super Market, Inc. (NASDAQ:VLGEA), and Old Second Bancorp Inc. (NASDAQ:OSBC). All of these stocks’ market caps resemble CHS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SPAR 11 44244 -4
EOLS 12 15398 6
VLGEA 8 45463 0
OSBC 12 34682 0
Average 10.75 34947 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $41 million in CHS’s case. Evolus, Inc. (NASDAQ:EOLS) is the most popular stock in this table. On the other hand Village Super Market, Inc. (NASDAQ:VLGEA) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Chico’s FAS, Inc. (NYSE:CHS) is more popular among hedge funds. 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. Hedge funds were also right about betting on CHS as the stock returned 22.2% during Q3 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.

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

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