Did Hedge Funds Make The Right Call On Boot Barn Holdings Inc (BOOT)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Boot Barn Holdings Inc (NYSE:BOOT) based on that data and determine whether they were really smart about the stock.

Boot Barn Holdings Inc (NYSE:BOOT) was in 20 hedge funds’ portfolios at the end of March. BOOT investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 28 hedge funds in our database with BOOT holdings at the end of the previous quarter. Our calculations also showed that BOOT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most traders, hedge funds are perceived as unimportant, old investment tools of years past. While there are more than 8000 funds with their doors open at present, Our experts choose to focus on the top tier of this group, about 850 funds. These money managers watch over bulk of the hedge fund industry’s total asset base, and by watching their first-class stock picks, Insider Monkey has found a few investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Lee Ainslie of Maverick Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s view the fresh hedge fund action surrounding Boot Barn Holdings Inc (NYSE:BOOT).

How are hedge funds trading Boot Barn Holdings Inc (NYSE:BOOT)?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in BOOT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Half Sky Capital, managed by Li Ran, holds the most valuable position in Boot Barn Holdings Inc (NYSE:BOOT). Half Sky Capital has a $13.2 million position in the stock, comprising 5.2% of its 13F portfolio. Coming in second is Peter Muller of PDT Partners, with a $3.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include Richard Walters II’s Stony Point Capital, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital and Richard Scott Greeder’s Broad Bay Capital. In terms of the portfolio weights assigned to each position Half Sky Capital allocated the biggest weight to Boot Barn Holdings Inc (NYSE:BOOT), around 5.19% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, setting aside 5.19 percent of its 13F equity portfolio to BOOT.

Seeing as Boot Barn Holdings Inc (NYSE:BOOT) has faced declining sentiment from hedge fund managers, it’s easy to see that there were a few hedge funds who were dropping their entire stakes heading into Q4. At the top of the heap, Richard Driehaus’s Driehaus Capital sold off the largest position of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $31.4 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also sold off its stock, about $13.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 8 funds heading into Q4.

Let’s now review 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 IES Holdings, Inc. (NASDAQ:IESC), Impinj, Inc. (NASDAQ:PI), Satsuma Pharmaceuticals, Inc. (NASDAQ:STSA), and Fortuna Silver Mines Inc. (NYSE:FSM). This group of stocks’ market caps are closest to BOOT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IESC 10 237335 -1
PI 18 137212 -2
STSA 5 157511 0
FSM 8 33856 -1
Average 10.25 141479 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $32 million in BOOT’s case. Impinj, Inc. (NASDAQ:PI) is the most popular stock in this table. On the other hand Satsuma Pharmaceuticals, Inc. (NASDAQ:STSA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Boot Barn Holdings Inc (NYSE:BOOT) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 18.6% in 2020 through July 27th but still managed to beat the market by 17.1 percentage points. Hedge funds were also right about betting on BOOT as the stock returned 41.9% since Q1 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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