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Did Hedge Funds Make The Right Call On 1-800-FLOWERS.COM, Inc. (FLWS) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) at the end of the first quarter and determine whether the smart money was really smart about this stock.

1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) has experienced an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that FLWS 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.

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Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let’s take a peek at the recent hedge fund action surrounding 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS).

What have hedge funds been doing with 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS)?

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FLWS over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FLWS A Good Stock To Buy?

The largest stake in 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) was held by Shannon River Fund Management, which reported holding $12.2 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $8.5 million position. Other investors bullish on the company included GAMCO Investors, Intrinsic Edge Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Beddow Capital Management allocated the biggest weight to 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), around 3.13% of its 13F portfolio. Nishkama Capital is also relatively very bullish on the stock, dishing out 2.13 percent of its 13F equity portfolio to FLWS.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS). Marshall Wace LLP had $8.5 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Ravee Mehta’s Nishkama Capital, Joel Greenblatt’s Gotham Asset Management, and Israel Englander’s Millennium Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) but similarly valued. These stocks are Sunnova Energy International Inc. (NYSE:NOVA), Hercules Capital Inc (NYSE:HTGC), The RMR Group Inc. (NASDAQ:RMR), and Revance Therapeutics Inc (NASDAQ:RVNC). This group of stocks’ market valuations are similar to FLWS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NOVA 9 49870 0
HTGC 16 61309 3
RMR 14 76666 -7
RVNC 11 49067 -5
Average 12.5 59228 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $60 million in FLWS’s case. Hercules Capital Inc (NYSE:HTGC) is the most popular stock in this table. On the other hand Sunnova Energy International Inc. (NYSE:NOVA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) 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 18.6% in 2020 through July 27th but still managed to beat the market by 17.1 percentage points. Hedge funds were also right about betting on FLWS as the stock returned 91.6% since Q1 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.

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