The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Big 5 Sporting Goods Corporation (NASDAQ:BGFV) from the perspective of those successful funds.
Is Big 5 Sporting Goods Corporation (NASDAQ:BGFV) a healthy stock for your portfolio? Prominent investors are in a bullish mood. The number of long hedge fund positions that are disclosed in regulatory 13F filings moved up by 5 in recent months. 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 First Business Financial Services Inc (NASDAQ:FBIZ), Independence Contract Drilling Inc (NYSE:ICD), and Marlin Business Services Corp. (NASDAQ:MRLN) 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.
What have hedge funds been doing with Big 5 Sporting Goods Corporation (NASDAQ:BGFV)?
Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 50% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in BGFV heading into this year, so sentiment is now positive for the year after declines in the first-half of 2016. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Alexander Medina Seaver’s Stadium Capital Management has the largest position in Big 5 Sporting Goods Corporation (NASDAQ:BGFV), worth close to $35.1 million, corresponding to 11.4% of its total 13F portfolio. Sitting at the No. 2 spot is GAMCO Investors, led by Mario Gabelli, which holds a $5.7 million position. Remaining peers with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’ AQR Capital Management, and David E. Shaw’s D E Shaw. 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.
As aggregate interest increased, key hedge funds have been driving this bullishness. Atika Capital, led by Brad Farber, assembled the most outsized position in Big 5 Sporting Goods Corporation (NASDAQ:BGFV). Atika Capital had $2.9 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $2.4 million investment in the stock during the quarter. The other funds with brand new BGFV positions are Steve Cohen’s Point72 Asset Management, David Harding’s Winton Capital Management, and Israel Englander’s Millennium Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Big 5 Sporting Goods Corporation (NASDAQ:BGFV) but similarly valued. These stocks are First Business Financial Services Inc (NASDAQ:FBIZ), Independence Contract Drilling Inc (NYSE:ICD), Marlin Business Services Corp. (NASDAQ:MRLN), and Rightside Group Ltd (NASDAQ:NAME). This group of stocks’ market values are closest to BGFV’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $67 million in BGFV’s case. Independence Contract Drilling Inc (NYSE:ICD) is the most popular stock in this table. On the other hand First Business Financial Services Inc (NASDAQ:FBIZ) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Big 5 Sporting Goods Corporation (NASDAQ:BGFV) 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.