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Did Hedge Funds Drop The Ball On Big Lots, Inc. (BIG)?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Big Lots, Inc. (NYSE:BIG).

Big Lots, Inc. (NYSE:BIG) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the fourth quarter of 2018. 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 CorVel Corporation (NASDAQ:CRVL), Huron Consulting Group Inc. (NASDAQ:HURN), and Glu Mobile Inc. (NASDAQ:GLUU) to gather more data points.

Today there are a lot of gauges stock traders have at their disposal to size up stocks. A duo of the most useful gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outperform the S&P 500 by a solid amount (see the details here).

Lee Ainslie MAVERICK CAPITAL

We’re going to check out the fresh hedge fund action surrounding Big Lots, Inc. (NYSE:BIG).

How are hedge funds trading Big Lots, Inc. (NYSE:BIG)?

Heading into the first quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in BIG over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with BIG Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Big Lots, Inc. (NYSE:BIG). AQR Capital Management has a $44.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Maverick Capital, led by Lee Ainslie, holding a $19.4 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism consist of Ken Griffin’s Citadel Investment Group, Dmitry Balyasny’s Balyasny Asset Management and Israel Englander’s Millennium Management.

Due to the fact that Big Lots, Inc. (NYSE:BIG) has experienced falling interest from hedge fund managers, we can see that there were a few hedgies that slashed their entire stakes last quarter. Interestingly, Brandon Haley’s Holocene Advisors dropped the biggest stake of the 700 funds followed by Insider Monkey, comprising close to $35.1 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $12 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Big Lots, Inc. (NYSE:BIG). These stocks are CorVel Corporation (NASDAQ:CRVL), Huron Consulting Group (NASDAQ:HURN), Glu Mobile Inc. (NASDAQ:GLUU), and Loral Space & Communications Inc. (NASDAQ:LORL). This group of stocks’ market caps are similar to BIG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRVL 15 112790 4
HURN 13 28589 2
GLUU 20 108209 -2
LORL 18 564857 -4
Average 16.5 203611 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $204 million. That figure was $138 million in BIG’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand Huron Consulting Group (NASDAQ:HURN) is the least popular one with only 13 bullish hedge fund positions. Big Lots, Inc. (NYSE:BIG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on BIG as the stock returned 31.6% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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