Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Movado Group, Inc (NYSE:MOV), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is MOV a good stock to buy now? The best stock pickers were turning bullish. The number of bullish hedge fund positions rose by 2 in recent months. Movado Group, Inc (NYSE:MOV) was in 20 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 26. Our calculations also showed that MOV isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Harding
David Harding of Winton Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's analyze the fresh hedge fund action surrounding Movado Group, Inc (NYSE:MOV).
Do Hedge Funds Think MOV Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2020. By comparison, 12 hedge funds held shares or bullish call options in MOV a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Movado Group, Inc (NYSE:MOV) was held by GAMCO Investors, which reported holding $2.9 million worth of stock at the end of September. It was followed by Contrarius Investment Management with a $2 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position AWH Capital allocated the biggest weight to Movado Group, Inc (NYSE:MOV), around 0.84% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, earmarking 0.18 percent of its 13F equity portfolio to MOV.
Consequently, specific money managers have jumped into Movado Group, Inc (NYSE:MOV) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the most outsized position in Movado Group, Inc (NYSE:MOV). Two Sigma Advisors had $0.7 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.4 million position during the quarter. The other funds with brand new MOV positions are David Harding's Winton Capital Management and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's now take a look at hedge fund activity in other stocks similar to Movado Group, Inc (NYSE:MOV). We will take a look at SC Health Corporation (NYSE:SCPE), American National BankShares Inc (NASDAQ:AMNB), GigCapital2, Inc. (NYSE:GIX), Nature's Sunshine Products Inc (NASDAQ:NATR), Teekay Corporation (NYSE:TK), KalVista Pharmaceuticals, Inc. (NASDAQ:KALV), and Genfit SA (NASDAQ:GNFT). This group of stocks' market valuations are closest to MOV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCPE,15,75596,1 AMNB,4,4379,2 GIX,14,70977,4 NATR,9,90264,1 TK,8,11158,-6 KALV,15,66712,-3 GNFT,1,150,-1 Average,9.4,45605,-0.3 [/table]
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $16 million in MOV's case. SC Health Corporation (NYSE:SCPE) is the most popular stock in this table. On the other hand Genfit SA (NASDAQ:GNFT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Movado Group, Inc (NYSE:MOV) is more popular among hedge funds. Our overall hedge fund sentiment score for MOV is 80.1. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on MOV as the stock returned 62.3% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
