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Did Hedge Funds Make The Right Call On G-III Apparel Group, Ltd. (GIII) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtG-III Apparel Group, Ltd. (NASDAQ:GIII) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is G-III Apparel Group, Ltd. (NASDAQ:GIII) an exceptional investment today? Prominent investors were in a bearish mood. The number of bullish hedge fund bets were cut by 2 in recent months. Our calculations also showed that GIII 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). GIII was in 17 hedge funds’ portfolios at the end of the first quarter of 2020. There were 19 hedge funds in our database with GIII positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most stock holders, hedge funds are viewed as worthless, old financial vehicles of the past. While there are more than 8000 funds trading today, Our experts look at the aristocrats of this club, about 850 funds. Most estimates calculate that this group of people handle bulk of the smart money’s total asset base, and by shadowing their matchless stock picks, Insider Monkey has come up with many investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

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. Now we’re going to view the recent hedge fund action regarding G-III Apparel Group, Ltd. (NASDAQ:GIII).

How have hedgies been trading G-III Apparel Group, Ltd. (NASDAQ:GIII)?

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GIII over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GIII A Good Stock To Buy?

The largest stake in G-III Apparel Group, Ltd. (NASDAQ:GIII) was held by Candlestick Capital Management, which reported holding $11.9 million worth of stock at the end of September. It was followed by Millennium Management with a $8.7 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and Royce & Associates. In terms of the portfolio weights assigned to each position Candlestick Capital Management allocated the biggest weight to G-III Apparel Group, Ltd. (NASDAQ:GIII), around 0.5% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, designating 0.27 percent of its 13F equity portfolio to GIII.

Seeing as G-III Apparel Group, Ltd. (NASDAQ:GIII) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few funds who sold off their full holdings last quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management cut the largest investment of all the hedgies watched by Insider Monkey, valued at close to $22.6 million in stock, and Andrew Rechtschaffen’s AREX Capital Management was right behind this move, as the fund said goodbye to about $8 million worth. These bearish behaviors 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 G-III Apparel Group, Ltd. (NASDAQ:GIII) but similarly valued. We will take a look at Tejon Ranch Company (NYSE:TRC), Pope Resources L.P. (NASDAQ:POPE), Avadel Pharmaceuticals plc (NASDAQ:AVDL), and Barings BDC, Inc. (NYSE:BBDC). This group of stocks’ market caps are similar to GIII’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRC 11 50064 -3
POPE 5 4629 3
AVDL 16 112713 6
BBDC 7 16743 -3
Average 9.75 46037 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $45 million in GIII’s case. Avadel Pharmaceuticals plc (NASDAQ:AVDL) is the most popular stock in this table. On the other hand Pope Resources L.P. (NASDAQ:POPE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks G-III Apparel Group, Ltd. (NASDAQ:GIII) 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 GIII as the stock returned 46.5% 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.