The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Chico’s FAS, Inc. (NYSE:CHS) from the perspective of those elite funds.
Is Chico’s FAS, Inc. (NYSE:CHS) an outstanding investment now? The smart money is in a bearish mood. The number of long hedge fund bets dropped by 1 lately. CHS was in 21 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with CHS positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), and BlackRock Credit All Inc Trust IV (NYSE:BTZ) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How are hedge funds trading Chico’s FAS, Inc. (NYSE:CHS)?
Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 5% dip from the previous quarter, pushing hedge fund ownership of CHS down to a yearly low point. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the number one position in Chico’s FAS, Inc. (NYSE:CHS). Renaissance Technologies has a $51 million position in the stock. On Renaissance Technologies’ heels is AQR Capital Management, managed by Cliff Asness, which holds a $24.3 million position. Some other professional money managers that hold long positions comprise D E Shaw, Israel Englander’s Millennium Management, and James A. Mitarotonda’s Barington Capital Group.
Seeing as Chico’s FAS, Inc. (NYSE:CHS) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedgies that decided to sell off their full holdings last quarter. Intriguingly, Daniel S. Och’s OZ Management cut the largest stake of all the hedgies monitored by Insider Monkey, totaling about $15.3 million in stock. Gregg Moskowitz’s fund, Interval Partners, also cut its stock, about $12.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 fund last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Chico’s FAS, Inc. (NYSE:CHS). These stocks are GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), BlackRock Credit All Inc Trust IV (NYSE:BTZ), and Grupo Financiero Galicia S.A. (ADR) (NASDAQ:GGAL). This group of stocks’ market values are similar to CHS’s market value.
|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 18 hedge funds with bullish positions and the average amount invested in these stocks was $379 million. That figure was $176 million in CHS’ case. Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is the most popular stock in this table. On the other hand BlackRock Credit All Inc Trust IV (NYSE:BTZ) is the least popular one with only 3 bullish hedge fund positions. Chico’s FAS, Inc. (NYSE:CHS) 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. In this regard ARIA might be a better candidate to consider a long position in.