In this article we will check out the progression of hedge fund sentiment towards Skechers USA Inc (NYSE:SKX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Skechers USA Inc (NYSE:SKX) the right pick for your portfolio? The smart money was taking an optimistic view. The number of long hedge fund bets rose by 6 in recent months. Skechers USA Inc (NYSE:SKX) was in 35 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that SKX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a look at the fresh hedge fund action surrounding Skechers USA Inc (NYSE:SKX).
Do Hedge Funds Think SKX Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SKX over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Skechers USA Inc (NYSE:SKX) was held by Pzena Investment Management, which reported holding $254.2 million worth of stock at the end of June. It was followed by Tremblant Capital with a $142.2 million position. Other investors bullish on the company included Marshall Wace LLP, AQR Capital Management, and GLG Partners. In terms of the portfolio weights assigned to each position Intrepid Capital Management allocated the biggest weight to Skechers USA Inc (NYSE:SKX), around 5.23% of its 13F portfolio. Tremblant Capital is also relatively very bullish on the stock, earmarking 3.86 percent of its 13F equity portfolio to SKX.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Skechers USA Inc (NYSE:SKX). Marshall Wace LLP had $85.7 million invested in the company at the end of the quarter. Brett Barakett’s Tremblant Capital also made a $25.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Steve Cohen’s Point72 Asset Management, and Anthony Joseph Vaccarino’s North Fourth Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Skechers USA Inc (NYSE:SKX) but similarly valued. We will take a look at Tempur Sealy International Inc. (NYSE:TPX), Anaplan, Inc. (NYSE:PLAN), PVH Corp (NYSE:PVH), Lattice Semiconductor Corporation (NASDAQ:LSCC), LG Display Co Ltd. (NYSE:LPL), Churchill Downs Incorporated (NASDAQ:CHDN), and Rexford Industrial Realty Inc (NYSE:REXR). This group of stocks’ market values are similar to SKX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TPX | 35 | 1096506 | -2 |
| PLAN | 52 | 2141802 | -3 |
| PVH | 28 | 1759709 | -6 |
| LSCC | 24 | 306527 | 0 |
| LPL | 7 | 27354 | -2 |
| CHDN | 35 | 694267 | 16 |
| REXR | 21 | 128403 | 8 |
| Average | 28.9 | 879224 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $879 million. That figure was $773 million in SKX’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 7 bullish hedge fund positions. Skechers USA Inc (NYSE:SKX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SKX is 70.3. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately SKX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SKX were disappointed as the stock returned -17.6% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Skechers Usa Inc (NYSE:SKX)
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Disclosure: None. This article was originally published at Insider Monkey.
