Were Hedge Funds Right About Movado Group, Inc (MOV)?

In this article we will take a look at whether hedge funds think Movado Group, Inc (NYSE:MOV) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Movado Group, Inc (NYSE:MOV) has seen a decrease in hedge fund sentiment of late. Movado Group, Inc (NYSE:MOV) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 26. There were 18 hedge funds in our database with MOV positions at the end of the fourth quarter. Our calculations also showed that MOV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now let’s take a look at the recent hedge fund action regarding Movado Group, Inc (NYSE:MOV).

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

At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MOV over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

More specifically, GAMCO Investors was the largest shareholder of Movado Group, Inc (NYSE:MOV), with a stake worth $8.2 million reported as of the end of March. Trailing GAMCO Investors was Millennium Management, which amassed a stake valued at $6.4 million. Contrarius Investment Management, Arrowstreet Capital, and AWH Capital 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 AWH Capital allocated the biggest weight to Movado Group, Inc (NYSE:MOV), around 2.12% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, designating 0.27 percent of its 13F equity portfolio to MOV.

Due to the fact that Movado Group, Inc (NYSE:MOV) has witnessed falling interest from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their entire stakes last quarter. Intriguingly, Greg Eisner’s Engineers Gate Manager said goodbye to the biggest stake of the “upper crust” of funds followed by Insider Monkey, totaling close to $0.5 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dropped about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Movado Group, Inc (NYSE:MOV). We will take a look at Granite Point Mortgage Trust Inc. (NYSE:GPMT), PDF Solutions, Inc. (NASDAQ:PDFS), Revlon Inc (NYSE:REV), PLBY Group, Inc. (NASDAQ:PLBY), Flushing Financial Corporation (NASDAQ:FFIC), Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), and Dorian LPG Ltd (NYSE:LPG). This group of stocks’ market valuations are closest to MOV’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $34 million in MOV’s case. Revlon Inc (NYSE:REV) is the most popular stock in this table. On the other hand Granite Point Mortgage Trust Inc. (NYSE:GPMT) is the least popular one with only 8 bullish hedge fund positions. Movado Group, Inc (NYSE:MOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MOV is 41.6. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately MOV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MOV were disappointed as the stock returned 4.9% since the end of March (through 7/23) 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.

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