Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 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’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Express, Inc. (NYSE:EXPR) in this article.
Is EXPR a good stock to buy now? Express, Inc. (NYSE:EXPR) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of September. Our calculations also showed that EXPR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare EXPR to other stocks including ARC Document Solutions Inc (NYSE:ARC), Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), and ImmuCell Corporation (NASDAQ:ICCC) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the fresh hedge fund action surrounding Express, Inc. (NYSE:EXPR).
Do Hedge Funds Think EXPR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in EXPR over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Contrarius Investment Management held the most valuable stake in Express, Inc. (NYSE:EXPR), which was worth $3.7 million at the end of the third quarter. On the second spot was Divisar Capital which amassed $3.4 million worth of shares. Renaissance Technologies, Arrowstreet Capital, and Millennium 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 Divisar Capital allocated the biggest weight to Express, Inc. (NYSE:EXPR), around 1.12% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, designating 0.32 percent of its 13F equity portfolio to EXPR.
Since Express, Inc. (NYSE:EXPR) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their full holdings heading into Q4. Interestingly, Jeff Osher’s No Street Capital sold off the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling close to $8.3 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dumped about $0 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Express, Inc. (NYSE:EXPR) but similarly valued. These stocks are ARC Document Solutions Inc (NYSE:ARC), Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), ImmuCell Corporation (NASDAQ:ICCC), Immuron Limited (NASDAQ:IMRN), Pintec Technology Holdings Limited (NASDAQ:PT), Build-A-Bear Workshop, Inc (NYSE:BBW), and Paramount Gold Nevada Corp (NYSE:PZG). All of these stocks’ market caps are closest to EXPR’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 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $10 million in EXPR’s case. Build-A-Bear Workshop, Inc (NYSE:BBW) is the most popular stock in this table. On the other hand Pintec Technology Holdings Limited (NASDAQ:PT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Express, Inc. (NYSE:EXPR) is more popular among hedge funds. Our overall hedge fund sentiment score for EXPR is 66.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on EXPR as the stock returned 85.2% since the end of September (through 12/8) 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.
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Disclosure: None. This article was originally published at Insider Monkey.