Hedge Funds Are Buying Johnson Outdoors Inc. (JOUT)

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Johnson Outdoors Inc. (NASDAQ:JOUT) from the perspective of those successful funds.

Johnson Outdoors Inc. (NASDAQ:JOUT) has experienced an increase in support from the world’s most successful money managers recently. There were 6 hedge funds in our database with JOUT holdings at the end of September. At the end of this article we will also compare JOUT to other stocks including Horizon Global Corp (NYSE:HZN), Invacare Corporation (NYSE:IVC), and Versartic Inc (NASDAQ:VSAR) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

Keeping this in mind, we’re going to take a peek at the latest action regarding Johnson Outdoors Inc. (NASDAQ:JOUT).

What does the smart money think about Johnson Outdoors Inc. (NASDAQ:JOUT)?

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a boost of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in JOUT over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Johnson Outdoors Inc. (NASDAQ:JOUT). According to regulatory filings, the fund has an $8.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is Algert Coldiron Investors, led by Peter Algert and Kevin Coldiron, holding a $1.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Neil Chriss’s Hutchin Hill Capital. 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.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Israel Englander’s Millennium Management assembled the most valuable position in Johnson Outdoors Inc. (NASDAQ:JOUT). The fund reportedly had $0.6 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also made a $0.2 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Johnson Outdoors Inc. (NASDAQ:JOUT) but similarly valued. We will take a look at Horizon Global Corp (NYSE:HZN), Invacare Corporation (NYSE:IVC), Versartic Inc (NASDAQ:VSAR), and Ashford Hospitality Prime Inc (NYSE:AHP). This group of stocks’ market values are similar to JOUT’s market value.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $11 million in JOUT’s case. Horizon Global Corp (NYSE:HZN) is the most popular stock in this table. On the other hand Ashford Hospitality Prime Inc (NYSE:AHP) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Johnson Outdoors Inc. (NASDAQ:JOUT) is even less popular than AHP. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None