Is GOOS A Good Stock To Buy Now According To Hedge Funds?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Canada Goose Holdings Inc. (NYSE:GOOS) changed recently.

Is GOOS a good stock to buy now? Canada Goose Holdings Inc. (NYSE:GOOS) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. GOOS has experienced an increase in hedge fund interest recently. There were 20 hedge funds in our database with GOOS positions at the end of the second quarter. Our calculations also showed that GOOS 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

William Harnisch

William Harnisch of Peconic Partners LLC

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. With all of this in mind let’s analyze the fresh hedge fund action surrounding Canada Goose Holdings Inc. (NYSE:GOOS).

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

At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GOOS over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Canada Goose Holdings Inc. (NYSE:GOOS) was held by Miller Value Partners, which reported holding $63.1 million worth of stock at the end of September. It was followed by Ancient Art (Teton Capital) with a $19.9 million position. Other investors bullish on the company included Royce & Associates, Millennium Management, and Carlson Capital. In terms of the portfolio weights assigned to each position Ancient Art (Teton Capital) allocated the biggest weight to Canada Goose Holdings Inc. (NYSE:GOOS), around 2.73% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, setting aside 2.27 percent of its 13F equity portfolio to GOOS.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Carlson Capital, managed by Clint Carlson, created the most outsized position in Canada Goose Holdings Inc. (NYSE:GOOS). Carlson Capital had $13.2 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $10.7 million position during the quarter. The other funds with new positions in the stock are William Harnisch’s Peconic Partners LLC, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Canada Goose Holdings Inc. (NYSE:GOOS) but similarly valued. We will take a look at Southwest Gas Holdings, Inc. (NYSE:SWX), Valvoline Inc. (NYSE:VVV), National Oilwell Varco, Inc. (NYSE:NOV), MSC Industrial Direct Co Inc (NYSE:MSM), The Hanover Insurance Group, Inc. (NYSE:THG), Texas Pacific Land Trust (NYSE:TPL), and The Hain Celestial Group, Inc. (NASDAQ:HAIN). This group of stocks’ market valuations are closest to GOOS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWX 16 77908 3
VVV 35 559656 -5
NOV 33 530078 3
MSM 22 266847 -8
THG 27 142850 2
TPL 13 762288 -1
HAIN 21 892531 -3
Average 23.9 461737 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $462 million. That figure was $191 million in GOOS’s case. Valvoline Inc. (NYSE:VVV) is the most popular stock in this table. On the other hand Texas Pacific Land Trust (NYSE:TPL) is the least popular one with only 13 bullish hedge fund positions. Canada Goose Holdings Inc. (NYSE:GOOS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GOOS is 45.9. 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. This is a slightly negative signal and 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 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 surpassed the market again by 15.8 percentage points. Unfortunately GOOS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GOOS investors were disappointed as the stock returned -5.7% since the end of September (through 12/14) 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 most of these stocks already outperformed the market in 2020.

Follow Canada Goose Holdings Inc. (NYSE:GOOS)

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