Signet Jewelers Ltd. (NYSE:SIG) is crumbling in pre-market trading this morning as the jeweler missed expectations with its fiscal third quarter 2015 earnings for the period ending October 31 and investors worry over the company’s declining margins. Earnings came in at $15 million or $0.19 per share, $0.33 per share when excluding certain items, while analysts had been expecting $0.39 in EPS. Revenue growth was primarily driven by the lower-priced Kay brand, with sales at those stores up by 7.1% year-over-year. Signet also guided light for the fiscal fourth quarter ending January, anticipating earnings of between $3.40 and $3.60 per share, with analysts predicting $3.58 in EPS for the holiday quarter. Shares are down by 6.15% in pre-market trading following the results, pushing them down to a loss in the fourth quarter. The results are in-line with the declining sentiment of the top investors tracked by Insider Monkey, who were collectively moving out of the stock in the third quarter.
The number of bullish hedge fund positions retreated by 2 in the quarter. Signet Jewelers Ltd. (NYSE:SIG) was in 47 hedge funds’ portfolios at the end of the third quarter of 2015. There were 49 hedge funds in our database with Signet Jewelers Ltd. (NYSE:SIG) holdings at the end of the second quarter. At the end of this article we will also compare Signet Jewelers Ltd. (NYSE:SIG) to other stocks including Continental Resources, Inc. (NYSE:CLR), Rockwell Collins, Inc. (NYSE:COL), and D.R. Horton, Inc. (NYSE:DHI) to get a better sense of its popularity.
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With all of this in mind, let’s take a gander at the new action regarding Signet Jewelers Ltd. (NYSE:SIG).
What does the smart money think about Signet Jewelers Ltd. (NYSE:SIG)?
At Q3’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 4% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Corvex Capital, managed by Keith Meister, holds the most valuable position in Signet Jewelers Ltd. (NYSE:SIG). Corvex Capital has a $687.7 million position in the stock, comprising 8.1% of its 13F portfolio. The second-most bullish fund manager is Robert Joseph Caruso of Select Equity Group, with a $495.7 million position; the fund manager has 4.7% of his firm’s 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Alan Fournier’s Pennant Capital Management, Farallon Capital, and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Signet Jewelers Ltd. (NYSE:SIG) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that slashed their positions entirely in the third quarter. Intriguingly, Eric W. Mandelblatt’s Soroban Capital Partners dropped the largest investment of the 700 funds watched by Insider Monkey, comprising close to $146.4 million in stock, and Zach Schreiber of Point State Capital was right behind this move, as the fund dumped about $30.7 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Signet Jewelers Ltd. (NYSE:SIG). These stocks are Continental Resources, Inc. (NYSE:CLR), Rockwell Collins, Inc. (NYSE:COL), D.R. Horton, Inc. (NYSE:DHI), and SL Green Realty Corp (NYSE:SLG). All of these stocks’ market caps resemble Signet Jewelers Ltd. (NYSE:SIG)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $509 million.That figure was $3.15 billion in Signet Jewelers Ltd. (NYSE:SIG)’s case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand SL Green Realty Corp (NYSE:SLG) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Signet Jewelers Ltd. (NYSE:SIG) is still far more popular among hedge funds, despite a dip in sentiment. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio on today’s dip.