Steven Madden, Ltd. (SHOO): Are Hedge Funds Right About This Stock?

At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Steven Madden, Ltd. (NASDAQ:SHOO) makes for a good investment right now.

Is Steven Madden, Ltd. (NASDAQ:SHOO) a buy here? The smart money was in an optimistic mood. The number of long hedge fund bets inched up by 5 in recent months. Steven Madden, Ltd. (NASDAQ:SHOO) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that SHOO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most market participants, hedge funds are viewed as unimportant, old financial tools of yesteryear. While there are over 8000 funds trading today, We hone in on the masters of this group, about 850 funds. These hedge fund managers watch over the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their highest performing equity investments, Insider Monkey has found many investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 let’s go over the recent hedge fund action surrounding Steven Madden, Ltd. (NASDAQ:SHOO).

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

Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SHOO over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Is SHOO A Good Stock To Buy?

Among these funds, Scopus Asset Management held the most valuable stake in Steven Madden, Ltd. (NASDAQ:SHOO), which was worth $61.5 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $29.1 million worth of shares. Balyasny Asset Management, 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 Scopus Asset Management allocated the biggest weight to Steven Madden, Ltd. (NASDAQ:SHOO), around 0.77% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to SHOO.

As industrywide interest jumped, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Steven Madden, Ltd. (NASDAQ:SHOO). Balyasny Asset Management had $17.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $2.4 million investment in the stock during the quarter. The other funds with brand new SHOO positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Renaissance Technologies, and Noam Gottesman’s GLG Partners.

Let’s also examine hedge fund activity in other stocks similar to Steven Madden, Ltd. (NASDAQ:SHOO). We will take a look at Pacira Biosciences Inc (NASDAQ:PCRX), Antero Resources Corp (NYSE:AR), Acushnet Holdings Corp. (NYSE:GOLF), Alamos Gold Inc (NYSE:AGI), Cardlytics, Inc. (NASDAQ:CDLX), Corsair Gaming, Inc. (NASDAQ:CRSR), and Clover Health Investments, Corp. (NASDAQ:CLOV). All of these stocks’ market caps are similar to SHOO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PCRX 20 547351 0
AR 33 609879 2
GOLF 19 40986 6
AGI 22 267948 5
CDLX 38 1012610 6
CRSR 9 22426 -3
CLOV 23 822813 23
Average 23.4 474859 5.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $475 million. That figure was $141 million in SHOO’s case. Cardlytics, Inc. (NASDAQ:CDLX) is the most popular stock in this table. On the other hand Corsair Gaming, Inc. (NASDAQ:CRSR) is the least popular one with only 9 bullish hedge fund positions. Steven Madden, Ltd. (NASDAQ:SHOO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SHOO is 52. 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 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately SHOO wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SHOO investors were disappointed as the stock returned 8% since the end of March (through 7/16) 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 most of these stocks already outperformed the market in 2021.

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