Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Lands’ End, Inc. (NASDAQ:LE).
Is Lands’ End, Inc. (NASDAQ:LE) a great investment right now? Hedge funds are becoming less confident. The number of long hedge fund bets shrunk by 4 lately. LE was in 12 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with LE 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 Seadrill Partners LLC (NYSE:SDLP), Briggs & Stratton Corporation (NYSE:BGG), and Orion Engineered Carbons SA (NYSE:OEC) to gather more data points.
According to most traders, hedge funds are viewed as unimportant, old investment tools of the past. While there are greater than 8000 funds trading today, Our experts look at the crème de la crème of this group, around 700 funds. These investment experts shepherd most of all hedge funds’ total asset base, and by watching their inimitable stock picks, Insider Monkey has formulated several investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, we’re going to view the new action encompassing Lands’ End, Inc. (NASDAQ:LE).
Hedge fund activity in Lands’ End, Inc. (NASDAQ:LE)
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, ESL Investments, managed by Edward Lampert, holds the largest position in Lands’ End, Inc. (NASDAQ:LE). ESL Investments has a $181.6 million position in the stock, comprising 11.6% of its 13F portfolio. The second most bullish fund manager is Fairholme (FAIRX), managed by Bruce Berkowitz, which holds a $50.3 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Ken Griffin’s Citadel Investment Group, Andre F. Perold’s HighVista Strategies and D. E. Shaw’s D E Shaw.
Since Lands’ End, Inc. (NASDAQ:LE) has witnessed bearish sentiment from the smart money, it’s safe to say that there were a few hedge funds that elected to cut their entire stakes in the third quarter. At the top of the heap, Clint Carlson’s Carlson Capital dropped the largest stake of the 700 funds followed by Insider Monkey, valued at an estimated $23.3 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also said goodbye to its stock, about $14.9 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Lands’ End, Inc. (NASDAQ:LE). We will take a look at Seadrill Partners LLC (NYSE:SDLP), Briggs & Stratton Corporation (NYSE:BGG), Orion Engineered Carbons SA (NYSE:OEC), and Ebix Inc (NASDAQ:EBIX). All of these stocks’ market caps are closest to LE’s market cap.
|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 14 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $288 million in LE’s case. Briggs & Stratton Corporation (NYSE:BGG) is the most popular stock in this table. On the other hand, Seadrill Partners LLC (NYSE:SDLP) is the least popular one with only 6 bullish hedge fund positions. Lands’ End, Inc. (NASDAQ:LE) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BGG might be a better candidate to consider a long position.