We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Francesca’s Holdings Corp (NASDAQ:FRAN) based on that data.
Hedge fund interest in Francesca’s Holdings Corp (NASDAQ:FRAN) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Socket Mobile, Inc. (NASDAQ:SCKT), Viveve Medical, Inc. (NASDAQ:VIVE), and Hepion Pharmaceuticals, Inc. (NASDAQ:HEPA) to gather more data points. Our calculations also showed that FRAN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the key hedge fund action surrounding Francesca’s Holdings Corp (NASDAQ:FRAN).
What have hedge funds been doing with Francesca’s Holdings Corp (NASDAQ:FRAN)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FRAN over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Prescott Group Capital Management, managed by Phil Frohlich, holds the number one position in Francesca’s Holdings Corp (NASDAQ:FRAN). Prescott Group Capital Management has a $0.5 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Frederick Tucker Golden of Solas Capital Management, with a $0.3 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining peers that are bullish consist of Renaissance Technologies, Frederick DiSanto’s Ancora Advisors and . In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to Francesca’s Holdings Corp (NASDAQ:FRAN), around 0.36% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, earmarking 0.25 percent of its 13F equity portfolio to FRAN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Invenomic Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Prescott Group Capital Management).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Francesca’s Holdings Corp (NASDAQ:FRAN) but similarly valued. We will take a look at Socket Mobile, Inc. (NASDAQ:SCKT), Viveve Medical, Inc. (NASDAQ:VIVE), Hepion Pharmaceuticals, Inc. (NASDAQ:HEPA), and Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC). This group of stocks’ market valuations match FRAN’s market valuation.
|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 1.25 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $1 million in FRAN’s case. Socket Mobile, Inc. (NASDAQ:SCKT) is the most popular stock in this table. On the other hand Viveve Medical, Inc. (NASDAQ:VIVE) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Francesca’s Holdings Corp (NASDAQ:FRAN) is more popular among hedge funds. 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on FRAN as the stock returned 43.6% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.