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 7.6% in the 12 months ending November 21, 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, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-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 Boot Barn Holdings Inc (NYSE:BOOT) .
Boot Barn Holdings Inc (NYSE:BOOT) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of September. 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 Edge Therapeutics Inc (NASDAQ:EDGE), Big 5 Sporting Goods Corporation (NASDAQ:BGFV), and Nature’s Sunshine Prod. (NASDAQ:NATR) to gather more data points.
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.
Keeping this in mind, we’re going to take a glance at the fresh action surrounding Boot Barn Holdings Inc (NYSE:BOOT).
What does the smart money think about Boot Barn Holdings Inc (NYSE:BOOT)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BOOT over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group holds the most valuable position in Boot Barn Holdings Inc (NYSE:BOOT). Citadel Investment Group has a $9.6 million position in the stock. Coming in second is Chuck Royce of Royce & Associates holding a $8.3 million position. Some other peers with similar optimism encompass John Tompkins’s Tyvor Capital, Richard Driehaus’ Driehaus Capital and D E Shaw which is one of the biggest hedge funds in the world. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Boot Barn Holdings Inc (NYSE:BOOT) has gone through staid interest from the smart money, it’s safe to say that there was a specific group of hedgies that decided to sell off their positions entirely last quarter. It’s worth mentioning that Mark Coe’s Coe Capital Management cut the biggest position of all the hedgies tracked by Insider Monkey, comprising an estimated $0.8 million in stock. Jim Simons’ fund, Renaissance Technologies, also cut its stock, about $0.5 million worth.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Boot Barn Holdings Inc (NYSE:BOOT) but similarly valued. These stocks are Edge Therapeutics Inc (NASDAQ:EDGE), Big 5 Sporting Goods Corporation (NASDAQ:BGFV), Nature’s Sunshine Prod. (NASDAQ:NATR), and Proteostasis Therapeutics Inc (NASDAQ:PTI). This group of stocks’ market values are closest to BOOT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EDGE | 3 | 7244 | -1 |
| BGFV | 15 | 67405 | 5 |
| NATR | 5 | 110406 | 1 |
| PTI | 14 | 89361 | 8 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $29 million in BOOT’s case. Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is the most popular stock in this table. On the other hand Edge Therapeutics Inc (NASDAQ:EDGE) is the least popular one with only 3 bullish hedge fund positions. Boot Barn Holdings Inc (NYSE:BOOT) is not the least popular stock in this group but hedge fund interest is just average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BGFV might be a better candidate to consider taking a long position in.
Disclosure: None
