Do Hedge Funds Love Genesco Inc. (GCO)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have gone over 730 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 June 28th. In this article we look at what those investors think of Genesco Inc. (NYSE:GCO).

Is Genesco Inc. (NYSE:GCO) going to take off soon? The best stock pickers are taking a bearish view. The number of bullish hedge fund bets were cut by 2 in recent months. Our calculations also showed that GCO isn’t among the 30 most popular stocks among hedge funds (see the video below). GCO was in 17 hedge funds’ portfolios at the end of the second quarter of 2019. There were 19 hedge funds in our database with GCO holdings 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.


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 take a look at the latest hedge fund action regarding Genesco Inc. (NYSE:GCO).

Hedge fund activity in Genesco Inc. (NYSE:GCO)

At Q2’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the first quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in GCO a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Dmitry Balyasny

The largest stake in Genesco Inc. (NYSE:GCO) was held by Arrowstreet Capital, which reported holding $13 million worth of stock at the end of March. It was followed by D E Shaw with a $8 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and AQR Capital Management.

Judging by the fact that Genesco Inc. (NYSE:GCO) has witnessed declining sentiment from the smart money, logic holds that there is a sect of hedgies that elected to cut their full holdings in the second quarter. Intriguingly, Lee Ainslie’s Maverick Capital dumped the biggest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $1.1 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also said goodbye to its stock, about $0.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds in the second quarter.

Let’s now review hedge fund activity in other stocks similar to Genesco Inc. (NYSE:GCO). These stocks are Mobileiron Inc (NASDAQ:MOBL), Intersect ENT Inc (NASDAQ:XENT), CryoPort, Inc. (NASDAQ:CYRX), and Dime Community Bancshares, Inc. (NASDAQ:DCOM). All of these stocks’ market caps match GCO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MOBL 17 119966 0
XENT 15 281752 -8
CYRX 11 16610 4
DCOM 9 38533 1
Average 13 114215 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $56 million in GCO’s case. Mobileiron Inc (NASDAQ:MOBL) is the most popular stock in this table. On the other hand Dime Community Bancshares, Inc. (NASDAQ:DCOM) is the least popular one with only 9 bullish hedge fund positions. Genesco Inc. (NYSE:GCO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately GCO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GCO were disappointed as the stock returned -5.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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