Zumiez Inc. (ZUMZ): Hedge Funds and Insiders Are Bearish, What Should You Do?

Zumiez Inc. (NASDAQ:ZUMZ) was in 7 hedge funds’ portfolio at the end of December. ZUMZ has seen a decrease in activity from the world’s largest hedge funds lately. There were 13 hedge funds in our database with ZUMZ positions at the end of the previous quarter.

Zumiez Inc. (NASDAQ:ZUMZ)

If you’d ask most investors, hedge funds are assumed to be slow, old financial tools of yesteryear. While there are over 8000 funds with their doors open today, we hone in on the crème de la crème of this club, close to 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total capital, and by keeping an eye on their highest performing stock picks, we have spotted a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as beneficial, optimistic insider trading activity is a second way to parse down the stock market universe. As the old adage goes: there are lots of motivations for an executive to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if shareholders understand where to look (learn more here).

Consequently, it’s important to take a look at the key action surrounding Zumiez Inc. (NASDAQ:ZUMZ).

How are hedge funds trading Zumiez Inc. (NASDAQ:ZUMZ)?

At the end of the fourth quarter, a total of 7 of the hedge funds we track were long in this stock, a change of -46% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Patrick McCormack’s Tiger Consumer Management had the most valuable position in Zumiez Inc. (NASDAQ:ZUMZ), worth close to $21.6 million, comprising 1% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $14.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Glenn Russell Dubin’s Highbridge Capital Management, Joel Greenblatt’s Gotham Asset Management and Jim Simons’s Renaissance Technologies.

Since Zumiez Inc. (NASDAQ:ZUMZ) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies who sold off their full holdings in Q4. Intriguingly, David Keidan’s Buckingham Capital Management said goodbye to the biggest investment of the 450+ funds we watch, comprising an estimated $30.3 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund dumped about $3.6 million worth. These transactions are interesting, as total hedge fund interest fell by 6 funds in Q4.

How are insiders trading Zumiez Inc. (NASDAQ:ZUMZ)?

Insider buying is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time frame, Zumiez Inc. (NASDAQ:ZUMZ) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Zumiez Inc. (NASDAQ:ZUMZ). These stocks are Barnes & Noble, Inc. (NYSE:BKS), American Greetings Corporation (NYSE:AM), United Online, Inc. (NASDAQ:UNTD), Titan Machinery Inc. (NASDAQ:TITN), and Brown Shoe Company, Inc. (NYSE:BWS). This group of stocks belong to the specialty retail, other industry and their market caps are similar to ZUMZ’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Barnes & Noble, Inc. (NYSE:BKS) 18 0 3
American Greetings Corporation (NYSE:AM) 12 0 0
United Online, Inc. (NASDAQ:UNTD) 13 0 2
Titan Machinery Inc. (NASDAQ:TITN) 12 0 2
Brown Shoe Company, Inc. (NYSE:BWS) 13 0 0

With the returns demonstrated by Insider Monkey’s studies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Zumiez Inc. (NASDAQ:ZUMZ) applies perfectly to this mantra.

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