Is it smart to be bullish on Children’s Place Retail Stores, Inc. (NASDAQ:PLCE)?
If you were to ask many of your fellow readers, hedge funds are seen as useless, outdated financial tools of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open today, Insider Monkey focuses on the top tier of this group, close to 525 funds. It is assumed that this group controls most of the hedge fund industry’s total capital, and by monitoring their highest performing picks, we’ve determined a few investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as crucial, bullish insider trading sentiment is another way to look at the financial markets. Just as you’d expect, there are a variety of incentives for an insider to drop shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).
What’s more, let’s analyze the newest info for Children’s Place Retail Stores, Inc. (NASDAQ:PLCE).
Hedge fund activity in Children’s Place Retail Stores, Inc. (NASDAQ:PLCE)
Heading into Q3, a total of 15 of the hedge funds we track were bullish in this stock, a change of -21% from the first quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially.
According to our 13F database, Chuck Royce’s Royce & Associates had the largest position in Children’s Place Retail Stores, Inc. (NASDAQ:PLCE), worth close to $106.5 million, comprising 0.3% of its total 13F portfolio. Coming in second is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $82.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Jonathan Kolatch’s Redwood Capital Management, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.
As Children’s Place Retail Stores, Inc. (NASDAQ:PLCE) has witnessed bearish sentiment from upper-tier hedge fund managers, logic holds that there were a few hedgies that slashed their entire stakes in Q1. Intriguingly, Joel Greenblatt’s Gotham Asset Management sold off the biggest investment of the 450+ funds we track, worth close to $3.9 million in stock. Neil Chriss’s fund, Hutchin Hill Capital, also sold off its stock, about $2.7 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds in Q1.
Insider trading activity in Children’s Place Retail Stores, Inc. (NASDAQ:PLCE)
Insider buying made by high-level executives is best served when the primary stock in question has seen transactions within the past six months. Over the latest six-month time period, Children’s Place Retail Stores, Inc. (NASDAQ:PLCE) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Children’s Place Retail Stores, Inc. (NASDAQ:PLCE). These stocks are Stage Stores Inc (NYSE:SSI), Ann Inc (NYSE:ANN), Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), The Jones Group Inc. (NYSE:JNY), and Aeropostale, Inc. (NYSE:ARO). This group of stocks belong to the apparel stores industry and their market caps are closest to PLCE’s market cap.