Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Signet Jewelers Limited (NYSE:SIG) in this article.
Is Signet Jewelers Limited (NYSE:SIG) a buy right now? The best stock pickers are becoming less confident. The number of long hedge fund positions went down by 5 in recent months. Our calculations also showed that sig isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to review the key hedge fund action regarding Signet Jewelers Limited (NYSE:SIG).
How are hedge funds trading Signet Jewelers Limited (NYSE:SIG)?
Heading into the first quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards SIG over the last 14 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Orbis Investment Management held the most valuable stake in Signet Jewelers Limited (NYSE:SIG), which was worth $137.4 million at the end of the fourth quarter. On the second spot was Select Equity Group which amassed $66.7 million worth of shares. Moreover, Maverick Capital, D E Shaw, and Two Sigma Advisors were also bullish on Signet Jewelers Limited (NYSE:SIG), allocating a large percentage of their portfolios to this stock.
Seeing as Signet Jewelers Limited (NYSE:SIG) has witnessed a decline in interest from hedge fund managers, logic holds that there were a few hedgies who sold off their positions entirely heading into Q3. At the top of the heap, Mark Kingdon’s Kingdon Capital dumped the largest investment of all the hedgies monitored by Insider Monkey, valued at close to $13 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund cut about $7.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to Signet Jewelers Limited (NYSE:SIG). These stocks are Bloomin’ Brands Inc (NASDAQ:BLMN), Sanmina Corporation (NASDAQ:SANM), NetGear, Inc. (NASDAQ:NTGR), and Aerie Pharmaceuticals Inc (NASDAQ:AERI). All of these stocks’ market caps are closest to SIG’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 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $200 million in SIG’s case. Aerie Pharmaceuticals Inc (NASDAQ:AERI) is the most popular stock in this table. On the other hand NetGear, Inc. (NASDAQ:NTGR) is the least popular one with only 14 bullish hedge fund positions. Signet Jewelers Limited (NYSE:SIG) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SIG wasn’t nearly as popular as these 15 stock and hedge funds that were betting on SIG were disappointed as the stock returned -29.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.