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 Crocs, Inc. (NASDAQ:CROX) based on that data and determine whether they were really smart about the stock.
Is Crocs, Inc. (NASDAQ:CROX) a buy right now? Prominent investors were turning bullish. The number of bullish hedge fund bets improved by 12 recently. Crocs, Inc. (NASDAQ:CROX) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistics is 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CROX 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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. Keeping this in mind let’s check out the fresh hedge fund action surrounding Crocs, Inc. (NASDAQ:CROX).
How have hedgies been trading Crocs, Inc. (NASDAQ:CROX)?
Heading into the third quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 48% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in CROX over the last 20 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Crocs, Inc. (NASDAQ:CROX), with a stake worth $128 million reported as of the end of September. Trailing Renaissance Technologies was Woodson Capital Management, which amassed a stake valued at $68.1 million. Polaris Capital Management, Citadel Investment Group, and Junto 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 5.25% of its 13F portfolio. Hidden Lake Asset Management is also relatively very bullish on the stock, earmarking 4.26 percent of its 13F equity portfolio to CROX.
As aggregate interest increased, key money managers have been driving this bullishness. Junto Capital Management, managed by James Parsons, initiated the most outsized position in Crocs, Inc. (NASDAQ:CROX). Junto Capital Management had $49.7 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $37.7 million investment in the stock during the quarter. The other funds with brand new CROX positions are George McCabe’s Portolan Capital Management, Zachary Miller’s Parian Global Management, and Kevin Mok’s Hidden Lake Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Crocs, Inc. (NASDAQ:CROX) but similarly valued. These stocks are Ovintiv Inc. (NYSE:OVV), Brookfield Business Partners L.P. (NYSE:BBU), TreeHouse Foods Inc. (NYSE:THS), Vonage Holdings Corp. (NASDAQ:VG), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), Cornerstone OnDemand, Inc. (NASDAQ:CSOD), and National General Holdings Corp (NASDAQ:NGHC). All of these stocks’ market caps are closest to CROX’s market cap.
|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 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $634 million in CROX’s case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Crocs, Inc. (NASDAQ:CROX) is more popular among hedge funds. Our overall hedge fund sentiment score for CROX is 90. 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 CROX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CROX were disappointed as the stock returned 8.4% 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.
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Disclosure: None. This article was originally published at Insider Monkey.