Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Hibbett Sports, Inc. (NASDAQ:HIBB) was in 9 hedge funds’ portfolios at the end of September. HIBB investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. There were 13 hedge funds in our database with HIBB holdings at the end of the previous quarter. At the end of this article we will also compare HIBB to other stocks including NutriSystem Inc. (NASDAQ:NTRI), Lydall, Inc. (NYSE:LDL), and HealthStream, Inc. (NASDAQ:HSTM) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s go over the latest action regarding Hibbett Sports, Inc. (NASDAQ:HIBB).
Hedge fund activity in Hibbett Sports, Inc. (NASDAQ:HIBB)
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the second quarter of 2016. On the other hand, there were a total of 18 hedge funds with a bullish position in HIBB at the beginning of this year. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC has the largest position in Hibbett Sports, Inc. (NASDAQ:HIBB), worth close to $9.5 million. The second largest stake is held by Joel Greenblatt of Gotham Asset Management which holds a $4.6 million position. Remaining members of the smart money with similar optimism include Paul Hondros’ AlphaOne Capital Partners, Mark Coe’s Coe Capital Management and Adam Wright and Gary Kohler’s Blue Clay Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Due to the fact that Hibbett Sports, Inc. (NASDAQ:HIBB) has encountered a decline in interest from the smart money, it’s safe to say that there was a specific group of fund managers who sold off their full holdings by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management, one of the 10 largest hedge funds in the world, sold off the largest investment of all the investors studied by Insider Monkey, worth an estimated $9.8 million in stock, and Jim Simons’ Renaissance Technologies was right behind this move, as the fund dropped about $4.4 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Hibbett Sports, Inc. (NASDAQ:HIBB). We will take a look at NutriSystem Inc. (NASDAQ:NTRI), Lydall, Inc. (NYSE:LDL), HealthStream, Inc. (NASDAQ:HSTM), and Incontact Inc (NASDAQ:SAAS). This group of stocks’ market valuations are closest to HIBB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NTRI | 19 | 152587 | -4 |
| LDL | 12 | 67062 | -1 |
| HSTM | 9 | 28378 | 0 |
| SAAS | 20 | 200190 | -4 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $22 million in HIBB’s case. Incontact Inc (NASDAQ:SAAS) is the most popular stock in this table. On the other hand HealthStream, Inc. (NASDAQ:HSTM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Hibbett Sports, Inc. (NASDAQ:HIBB) is even less popular than HSTM. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
