There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Barnes & Noble Education Inc (NYSE:BNED).
Barnes & Noble Education went public at the end of July and has managed to capture the attention of quite a few smart money investors. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as eLong, Inc. (ADR) (NASDAQ:LONG), MINDBODY Inc (NASDAQ:MB), and Performance Sports Group Ltd (NYSE:PSG) to gather more data points.
Follow Barnes & Noble Education Inc. (NYSE:BNED)
Follow Barnes & Noble Education Inc. (NYSE:BNED)
In the eyes of most investors, hedge funds are perceived as unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds in operation at present, Our experts hone in on the masters of this club, around 700 funds. These investment experts watch over bulk of the smart money’s total asset base, and by keeping an eye on their inimitable investments, Insider Monkey has formulated numerous investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, we’re going to view the latest action regarding Barnes & Noble Education Inc (NYSE:BNED).
How have hedgies been trading Barnes & Noble Education Inc (NYSE:BNED)?
According to Insider Monkey’s hedge fund database, among the funds that reported the largest stakes as of September 30, David Abrams’s Abrams Capital Management has the number one position in Barnes & Noble Education Inc (NYSE:BNED), worth close to $90.8 million, comprising 6.5% of its total 13F portfolio. On Abrams Capital Management’s heels is Whale Rock Capital Management, led by Alex Sacerdote, holding a $14.3 million position; 1.4% of its 13F portfolio is allocated to the stock. Some other peers that initiated long positions encompass Jim Simons’s Renaissance Technologies, Jeffrey Gendell’s Tontine Asset Management and Bernard Selz’s Selz Capital.
On the next page, we analyze hedge fund activity of similarly priced stocks to get a better feel on what the elite funds think of Barnes & Noble Education Inc (NYSE:BNED)
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Barnes & Noble Education Inc (NYSE:BNED) but similarly valued. We will take a look at eLong, Inc. (ADR) (NASDAQ:LONG), MINDBODY Inc (NASDAQ:MB), Performance Sports Group Ltd (NYSE:PSG), and Patrick Industries, Inc. (NASDAQ:PATK). This group of stocks’ market valuations resemble BNED’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LONG | 4 | 47125 | 0 |
| MB | 9 | 24341 | -7 |
| PSG | 11 | 24505 | 0 |
| PATK | 18 | 105827 | -1 |
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $158 million in BNED’s case. Patrick Industries, Inc. (NASDAQ:PATK) is the most popular stock in this table. On the other hand eLong, Inc. (ADR) (NASDAQ:LONG) is the least popular one with only four bullish hedge fund positions. Compared to these stocks Barnes & Noble Education Inc (NYSE:BNED) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
