Should You Buy Citi Trends, Inc. (CTRN)?
Should Citi Trends, Inc. (NASDAQ:CTRN) investors track the following data?
If you were to ask many of your fellow readers, hedge funds are seen as useless, outdated investment tools of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, this site focuses on the elite of this group, about 525 funds. Analysts calculate that this group controls most of the smart money's total capital, and by paying attention to their highest performing stock picks, we've come up with a number of investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as useful, optimistic insider trading sentiment is a second way to look at the financial markets. Obviously, there are many incentives for a bullish insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this method if "monkeys" understand what to do (learn more here).
Thus, we're going to discuss the recent info for Citi Trends, Inc. (NASDAQ:CTRN).
What have hedge funds been doing with Citi Trends, Inc. (NASDAQ:CTRN)?
At Q2's end, a total of 8 of the hedge funds we track held long positions in this stock, a change of 33% from one quarter earlier. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings significantly.
When using filings from the hedgies we track, Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management had the biggest position in Citi Trends, Inc. (NASDAQ:CTRN), worth close to $14.4 million, comprising 3.3% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $12.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw and Israel Englander's Millennium Management.
Now, specific money managers were breaking ground themselves. Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, established the biggest position in Citi Trends, Inc. (NASDAQ:CTRN). Nantahala Capital Management had 14.4 million invested in the company at the end of the quarter. Chuck Royce's Royce & Associates also made a $12.3 million investment in the stock during the quarter. The other funds with brand new CTRN positions are Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw, and Israel Englander's Millennium Management.
How have insiders been trading Citi Trends, Inc. (NASDAQ:CTRN)?
Insider buying is most useful when the company in focus has experienced transactions within the past six months. Over the latest half-year time frame, Citi Trends, Inc. (NASDAQ:CTRN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Citi Trends, Inc. (NASDAQ:CTRN). These stocks are Destination XL Group Inc (NASDAQ:DXLG), Christopher & Banks Corporation (NYSE:CBK), Cherokee Inc. (NASDAQ:CHKE), Pacific Sunwear of California, Inc. (NASDAQ:PSUN), and Body Central Corp (NASDAQ:BODY). This group of stocks are the members of the apparel stores industry and their market caps are similar to CTRN's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Destination XL Group Inc (NASDAQ:DXLG)
Christopher & Banks Corporation (NYSE:CBK)
Cherokee Inc. (NASDAQ:CHKE)
Pacific Sunwear of California, Inc. (NASDAQ:PSUN)
Body Central Corp (NASDAQ:BODY)
Using the returns explained by the previously mentioned tactics, average investors must always watch hedge fund and insider trading sentiment, and Citi Trends, Inc. (NASDAQ:CTRN) is an important part of this process.