We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Crocs, Inc. (NASDAQ:CROX) based on those filings.
Crocs, Inc. (NASDAQ:CROX) investors should pay attention to an increase in support from the world’s most elite money managers lately. CROX was in 36 hedge funds’ portfolios at the end of December. There were 30 hedge funds in our database with CROX positions at the end of the previous quarter. Our calculations also showed that CROX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most stock holders, hedge funds are assumed to be underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, We look at the upper echelon of this club, approximately 850 funds. Most estimates calculate that this group of people shepherd the lion’s share of the smart money’s total asset base, and by keeping track of their inimitable stock picks, Insider Monkey has formulated many investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Mark Kingdon of Kingdon Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s view the latest hedge fund action surrounding Crocs, Inc. (NASDAQ:CROX).
How have hedgies been trading Crocs, Inc. (NASDAQ:CROX)?
At the end of the fourth quarter, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CROX over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Crocs, Inc. (NASDAQ:CROX), with a stake worth $201.1 million reported as of the end of September. Trailing Renaissance Technologies was Marshall Wace LLP, which amassed a stake valued at $73.6 million. Arrowstreet Capital, Melvin Capital Management, and Woodson Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Woodson Capital Management allocated the biggest weight to Crocs, Inc. (NASDAQ:CROX), around 6.36% of its 13F portfolio. Rip Road Capital is also relatively very bullish on the stock, designating 6.13 percent of its 13F equity portfolio to CROX.
As one would reasonably expect, some big names were breaking ground themselves. Kingdon Capital, managed by Mark Kingdon, created the most outsized position in Crocs, Inc. (NASDAQ:CROX). Kingdon Capital had $18.1 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $15.8 million position during the quarter. The following funds were also among the new CROX investors: Dmitry Balyasny’s Balyasny Asset Management, Dennis Goldstein’s Rip Road Capital, and Minhua Zhang’s Weld Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Crocs, Inc. (NASDAQ:CROX). These stocks are Retail Properties of America Inc (NYSE:RPAI), Texas Capital Bancshares Inc (NASDAQ:TCBI), Fulton Financial Corp (NASDAQ:FULT), and Independent Bank Corp (NASDAQ:INDB). This group of stocks’ market caps are similar to CROX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RPAI | 21 | 266145 | -4 |
| TCBI | 26 | 251196 | 4 |
| FULT | 14 | 28333 | -3 |
| INDB | 14 | 17622 | 1 |
| Average | 18.75 | 140824 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $691 million in CROX’s case. Texas Capital Bancshares Inc (NASDAQ:TCBI) is the most popular stock in this table. On the other hand Fulton Financial Corp (NASDAQ:FULT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Crocs, Inc. (NASDAQ:CROX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately CROX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CROX were disappointed as the stock returned -55.5% during the first two and a half months of 2020 (through March 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
