Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Iconix Brand Group Inc (NASDAQ:ICON) from the perspective of those successful funds.
Iconix Brand Group Inc (NASDAQ:ICON) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. 11 hedge funds that we track were long the stock on September 30. There were 15 hedge funds in our database with ICON positions on June 30. At the end of this article we will also compare ICON to other stocks including Ocwen Financial Corporation (NYSE:OCN), Boulevard Acquisition Corp II (NASDAQ:BLVD), and Catchmark Timber Trust Inc (NYSE:CTT) to get a better sense of its popularity.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
What does the smart money think about Iconix Brand Group Inc (NASDAQ:ICON)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 27% drop from one quarter earlier. The graph below displays the number of hedge funds with bullish positions in ICON over the last 5 quarters, which has ended up back where it started. So, let’s find out 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, Huber Capital Management, led by Joe Huber, holds the most valuable position in Iconix Brand Group Inc (NASDAQ:ICON). Huber Capital Management has a $52.2 million position in the stock, comprising 2.1% of its 13F portfolio. The second most bullish fund manager is Graham Capital Management, led by Kenneth Tropin, holding a $6 million position. Remaining hedge funds and institutional investors with similar optimism contain David Keidan’s Buckingham Capital Management, Yi Xin’s Ariose Capital, and Renaissance Technologies, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Seeing as Iconix Brand Group Inc (NASDAQ:ICON) has faced declining sentiment from hedge fund managers, it’s easy to see that there were a few fund managers that slashed their positions entirely by the end of the third quarter. Intriguingly, Zeke Ashton’s Centaur Capital Partners dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, valued at about $2.9 million in stock. Neil Chriss’ fund, Hutchin Hill Capital, also dropped its stock, about $0.9 million worth.
Let’s now review hedge fund activity in other stocks similar to Iconix Brand Group Inc (NASDAQ:ICON). We will take a look at Ocwen Financial Corporation (NYSE:OCN), Boulevard Acquisition Corp II (NASDAQ:BLVD), Catchmark Timber Trust Inc (NYSE:CTT), and NewStar Financial Inc (NASDAQ:NEWS). All of these stocks’ market caps are closest to ICON’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $76 million in ICON’s case. Ocwen Financial Corporation (NYSE:OCN) is the most popular stock in this table. On the other hand NewStar Financial Inc (NASDAQ:NEWS) is the least popular one with only 4 bullish hedge fund positions. Iconix Brand Group Inc (NASDAQ:ICON) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OCN might be a better candidate to consider taking a long position in.