Before we spend countless hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Genesco Inc. (NYSE:GCO).
Is Genesco Inc. (NYSE:GCO) a healthy stock for your portfolio? Investors who are in the know are becoming less hopeful. The number of long hedge fund positions retreated by 3 in recent months. Our calculations also showed that gco isn’t among the 30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are tons of tools stock market investors have at their disposal to assess publicly traded companies. A pair of the less known tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outperform the market by a very impressive margin (see the details here).
We’re going to analyze the new hedge fund action encompassing Genesco Inc. (NYSE:GCO).
How are hedge funds trading Genesco Inc. (NYSE:GCO)?
Heading into the second quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in GCO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Genesco Inc. (NYSE:GCO), with a stake worth $11.2 million reported as of the end of March. Trailing Arrowstreet Capital was AQR Capital Management, which amassed a stake valued at $7.4 million. Winton Capital Management, Two Sigma Advisors, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Genesco Inc. (NYSE:GCO) has faced a decline in interest from hedge fund managers, it’s safe to say that there was a specific group of hedgies that slashed their positions entirely by the end of the third quarter. At the top of the heap, Ted White and Christopher Kiper’s Legion Partners Asset Management dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising close to $35 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $4.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Genesco Inc. (NYSE:GCO). These stocks are Boston Private Financial Holdings, Inc. (NASDAQ:BPFH), The Buckle, Inc. (NYSE:BKE), Fluidigm Corporation (NASDAQ:FLDM), and MAG Silver Corporation (NYSE:MAG). This group of stocks’ market caps resemble GCO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BPFH | 14 | 44330 | 1 |
| BKE | 11 | 26165 | -2 |
| FLDM | 19 | 157106 | 0 |
| MAG | 11 | 38491 | -3 |
| Average | 13.75 | 66523 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $48 million in GCO’s case. Fluidigm Corporation (NASDAQ:FLDM) is the most popular stock in this table. On the other hand The Buckle, Inc. (NYSE:BKE) is the least popular one with only 11 bullish hedge fund positions. Genesco Inc. (NYSE:GCO) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately GCO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GCO were disappointed as the stock returned -11.6% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
