Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 5.2% in the 12 months ending October 30, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of September 2014) generated a return of 9.5% during the same 12-month period, with 63% of these stock picks outperformed the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 16-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Barnes & Noble, Inc. (NYSE:BKS).
Barnes & Noble, Inc. was in 23 hedge funds’ portfolios at the end of the third quarter of 2015. BKS has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 31 hedge funds in our database with BKS positions at the end of the previous quarter. 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 Gray Television, Inc. (NYSE:GTN), Q2 Holdings Inc (NYSE:QTWO), and LDR Holding Corp (NASDAQ:LDRH) to gather more data points.
Today there are plenty of gauges stock market investors use to assess their stock investments. A couple of the most under-the-radar gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outpace their index-focused peers by a superb margin (see the details here).
With all of this in mind, let’s take a look at the key action encompassing Barnes & Noble, Inc. (NYSE:BKS).
What have hedge funds been doing with Barnes & Noble, Inc. (NYSE:BKS)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 26% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, David Abrams’s Abrams Capital Management has the biggest position in Barnes & Noble, Inc. (NYSE:BKS), worth close to $83.8 million, comprising 6% of its total 13F portfolio. The second largest stake is held by Silver Point Capital, led by Edward A. Mule, holding a $31 million position; 4% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish comprise Jeffrey Gendell’s Tontine Asset Management, Jim Simons’s Renaissance Technologies and Alex Sacerdote’s Whale Rock Capital Management.