Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Skechers USA Inc (NYSE:SKX) based on that data and determine whether they were really smart about the stock.
Is Skechers USA Inc (NYSE:SKX) a healthy stock for your portfolio? Investors who are in the know were taking a bullish view. The number of bullish hedge fund positions went up by 7 lately. Skechers USA Inc (NYSE:SKX) was in 33 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 36. Our calculations also showed that SKX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Now let’s take a gander at the recent hedge fund action regarding Skechers USA Inc (NYSE:SKX).
What have hedge funds been doing with Skechers USA Inc (NYSE:SKX)?
Heading into the third quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in SKX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Brett Barakett’s Tremblant Capital has the biggest position in Skechers USA Inc (NYSE:SKX), worth close to $136.1 million, amounting to 5.7% of its total 13F portfolio. On Tremblant Capital’s heels is John Smith Clark of Southpoint Capital Advisors, with a $103.6 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass Paul Marshall and Ian Wace’s Marshall Wace LLP, and Robert Pohly’s Samlyn Capital. In terms of the portfolio weights assigned to each position Tremblant Capital allocated the biggest weight to Skechers USA Inc (NYSE:SKX), around 5.72% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, dishing out 4.81 percent of its 13F equity portfolio to SKX.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Broad Peak Investment Holdings, managed by Hyder Ahmad, established the most outsized position in Skechers USA Inc (NYSE:SKX). Broad Peak Investment Holdings had $39 million invested in the company at the end of the quarter. Charles de Vaulx’s International Value Advisers also made a $26.3 million investment in the stock during the quarter. The other funds with brand new SKX positions are Robert Bishop’s Impala Asset Management, Lee Ainslie’s Maverick Capital, and Jinghua Yan’s TwinBeech Capital.
Let’s also examine hedge fund activity in other stocks similar to Skechers USA Inc (NYSE:SKX). These stocks are Invesco Ltd. (NYSE:IVZ), People’s United Financial, Inc. (NASDAQ:PBCT), First Industrial Realty Trust, Inc. (NYSE:FR), Novavax, Inc. (NASDAQ:NVAX), Oshkosh Corporation (NYSE:OSK), Sasol Limited (NYSE:SSL), and Grupo Aval Acciones y Valores S.A. (NYSE:AVAL). This group of stocks’ market valuations are closest to SKX’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $625 million in SKX’s case. First Industrial Realty Trust, Inc. (NYSE:FR) 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 9 bullish hedge fund positions. Compared to these stocks Skechers USA Inc (NYSE:SKX) is more popular among hedge funds. Our overall hedge fund sentiment score for SKX is 87.5. 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. 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 gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately SKX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SKX were disappointed as the stock returned -4.9% since the end of the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.