Finish Line Inc (NASDAQ:FINL) has reported strong fiscal first quarter 2016 results, surpassing analysts’ estimates for both its top and bottom lines. The lifestyle retailer had consolidated net sales of $443.4 million for the quarter, a 9.1% increase year-over-year, while diluted earnings per share stood at $0.30. Finish Line comfortably topped Wall Street’s earnings expectations of $0.25 per share and revenue of $432.4 million, sending shares trading 7.75% higher in Friday morning’s pre-market trading after yesterday’s flat performance. While talking about the financial results, Glenn Lyon, Chief Executive Officer and Chairman of Finish Line Inc (NASDAQ:FINL), said, “…We will continue to drive consistent growth and increased profitability across each of our divisions with focus on our customer-centric operating model. We are confident these strategies will translate into greater value for our shareholders over the long-term.” Along with the earnings, the company reported a strong 5.5% increase in its comparable store sales during the quarter and also announced that it would repurchase 1.25 million common shares during the quarter, worth $31.3 million.
Shares of Finish Line have grown 11.34% year-to-date which has to please the smart money that has been bullish on the stock of late. The number of hedge fund managers with long positions in Finish Line Inc as of March 31, grew to 23 , with net investments worth $205.45 million, an increase of four investors during the quarter, though invested capital declined slightly, by $4 million.
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 144% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
We also track the activity of insiders, and see with Finish Line Inc (NASDAQ:FINL) that there has been a moderate amount of insider trading activity during the last six months, with CEO and Chairman Lyon selling 15,000 shares on April 24, and Samuel M. Sato, President, Director and Member of Strategy Committee, selling 6,000 shares on April 9.
A strong share performance over the last six months could be one of the reasons behind an increase in hedge fund sentiment in recent months. S0, let’s check out the recent action encompassing Finish Line Inc (NASDAQ:FINL).
Hedge fund activity in Finish Line Inc (NASDAQ:FINL)
Heading into the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the fourth quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates had the largest position in Finish Line Inc (NASDAQ:FINL), worth close to $125.2 million, comprising 0.5% of its total 13F portfolio. Coming in second was Citadel Investment Group, led by Ken Griffin, holding a $26.8 million position; the fund has less than 0.1% of its massive 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Steve Cohen’s Point72 Asset Management, Israel Englander’s Millennium Management, and Jerome Debs’ Bodri Capital Management.
Consequently, specific money managers have been driving this bullishness. PDT Partners, managed by Peter Muller, assembled the most valuable position in Finish Line Inc (NASDAQ:FINL). PDT Partners had $3.9 million invested in a new position in the company at the end of the first quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $2.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Steven Owsley’s Madison Street Partners, David Costen Haley’s HBK Investments, and John Overdeck and David Siegel’s Two Sigma Advisors.
With an increase in hedge fund sentiment and strong first quarter fiscal 2016 results, we believe the finish line has yet to be reached on Finish Line’s run, and recommend it as a buy.
Disclosure: None
