Is GIII A Good Stock To Buy Now?

Before we spend countless hours researching a company, we 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 G-III Apparel Group, Ltd. (NASDAQ:GIII).

G-III Apparel Group, Ltd. (NASDAQ:GIII) was in 16 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. GIII shareholders have witnessed an increase in hedge fund interest of late. There were 10 hedge funds in our database with GIII positions at the end of the second quarter. Our calculations also showed that GIII 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).

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.

Steven Cohen

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 we’re going to take a peek at the new hedge fund action surrounding G-III Apparel Group, Ltd. (NASDAQ:GIII).

Do Hedge Funds Think GIII Is A Good Stock To Buy Now?

At the end of September, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in GIII over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is GIII A Good Stock To Buy?

More specifically, D E Shaw was the largest shareholder of G-III Apparel Group, Ltd. (NASDAQ:GIII), with a stake worth $16.9 million reported as of the end of September. Trailing D E Shaw was Candlestick Capital Management, which amassed a stake valued at $7.9 million. Arrowstreet Capital, Potrero Capital Research, and Point72 Asset 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 Potrero Capital Research allocated the biggest weight to G-III Apparel Group, Ltd. (NASDAQ:GIII), around 1.36% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, earmarking 0.37 percent of its 13F equity portfolio to GIII.

As one would reasonably expect, some big names have been driving this bullishness. Candlestick Capital Management, managed by Jack Woodruff, established the most outsized position in G-III Apparel Group, Ltd. (NASDAQ:GIII). Candlestick Capital Management had $7.9 million invested in the company at the end of the quarter. Jack Ripsteen’s Potrero Capital Research also initiated a $4.2 million position during the quarter. The other funds with brand new GIII positions are Steve Cohen’s Point72 Asset Management, Joel Greenblatt’s Gotham Asset Management, and David Harding’s Winton Capital Management.

Let’s go over hedge fund activity in other stocks similar to G-III Apparel Group, Ltd. (NASDAQ:GIII). We will take a look at Albireo Pharma, Inc. (NASDAQ:ALBO), Transportadora de Gas del Sur SA (NYSE:TGS), Wabash National Corporation (NYSE:WNC), The Andersons, Inc. (NASDAQ:ANDE), Colony Credit Real Estate, Inc. (NYSE:CLNC), Neenah Inc. (NYSE:NP), and Clearwater Paper Corp (NYSE:CLW). This group of stocks’ market values are similar to GIII’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALBO 22 220205 10
TGS 6 9871 1
WNC 18 58904 3
ANDE 15 25045 4
CLNC 10 37346 4
NP 11 21432 -2
CLW 13 50476 -1
Average 13.6 60468 2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $45 million in GIII’s case. Albireo Pharma, Inc. (NASDAQ:ALBO) is the most popular stock in this table. On the other hand Transportadora de Gas del Sur SA (NYSE:TGS) is the least popular one with only 6 bullish hedge fund positions. G-III Apparel Group, Ltd. (NASDAQ:GIII) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GIII is 64.1. 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 gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on GIII as the stock returned 62.4% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.