Hedge Funds Are Betting On Foot Locker, Inc. (FL)

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 Foot Locker, Inc. (NYSE:FL).

Foot Locker, Inc. (NYSE:FL) investors should be aware of an increase in enthusiasm from smart money lately. Foot Locker, Inc. (NYSE:FL) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistic is 38. There were 28 hedge funds in our database with FL positions at the end of the first quarter. Our calculations also showed that FL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Now let’s review the key hedge fund action surrounding Foot Locker, Inc. (NYSE:FL).

Do Hedge Funds Think FL Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in FL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the biggest position in Foot Locker, Inc. (NYSE:FL). Two Sigma Advisors has a $88.7 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $67 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Cliff Asness’s AQR Capital Management, Steven Tananbaum’s GoldenTree Asset Management and Steven Boyd’s Armistice Capital. In terms of the portfolio weights assigned to each position MIK Capital allocated the biggest weight to Foot Locker, Inc. (NYSE:FL), around 5.42% of its 13F portfolio. Dendur Capital is also relatively very bullish on the stock, dishing out 3.42 percent of its 13F equity portfolio to FL.

As one would reasonably expect, key money managers have jumped into Foot Locker, Inc. (NYSE:FL) headfirst. GoldenTree Asset Management, managed by Steven Tananbaum, initiated the biggest position in Foot Locker, Inc. (NYSE:FL). GoldenTree Asset Management had $38.4 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $31.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeffrey Tannenbaum’s Fir Tree, Angela Aldrich’s Bayberry Capital Partners, and Marc Majzner’s Clearline Capital.

Let’s also examine hedge fund activity in other stocks similar to Foot Locker, Inc. (NYSE:FL). We will take a look at 360 DigiTech, Inc. (NASDAQ:QFIN), Reynolds Consumer Products Inc. (NASDAQ:REYN), MultiPlan Corporation (NYSE:MPLN), Medpace Holdings, Inc. (NASDAQ:MEDP), Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), LHC Group, Inc. (NASDAQ:LHCG), and Nexstar Media Group, Inc. (NASDAQ:NXST). This group of stocks’ market caps resemble FL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $300 million. That figure was $416 million in FL’s case. Nexstar Media Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) is the least popular one with only 4 bullish hedge fund positions. Foot Locker, Inc. (NYSE:FL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FL is 77.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately FL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FL were disappointed as the stock returned -22% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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