Hedge Funds Are Selling Boot Barn Holdings Inc (BOOT)

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Boot Barn Holdings Inc (NYSE:BOOT).

Is Boot Barn Holdings Inc (NYSE:BOOT) the right pick for your portfolio? Hedge funds were in a pessimistic mood. The number of bullish hedge fund positions decreased by 1 recently. Boot Barn Holdings Inc (NYSE:BOOT) was in 28 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. Our calculations also showed that BOOT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a gander at the fresh hedge fund action encompassing Boot Barn Holdings Inc (NYSE:BOOT).

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

Do Hedge Funds Think BOOT Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in BOOT a year ago. 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 Insider Monkey’s hedge fund database, Richard Driehaus’s Driehaus Capital has the number one position in Boot Barn Holdings Inc (NYSE:BOOT), worth close to $75.6 million, accounting for 0.9% of its total 13F portfolio. The second largest stake is held by Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $23.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise John Overdeck and David Siegel’s Two Sigma Advisors, Dmitry Balyasny’s Balyasny Asset Management and Jordan Moelis and Jeff Farroni’s Deep Field Asset Management. In terms of the portfolio weights assigned to each position Deep Field Asset Management allocated the biggest weight to Boot Barn Holdings Inc (NYSE:BOOT), around 13.99% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, setting aside 3.95 percent of its 13F equity portfolio to BOOT.

Because Boot Barn Holdings Inc (NYSE:BOOT) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few money managers who sold off their full holdings by the end of the third quarter. It’s worth mentioning that Lawrence Kam’s Sonic Capital dropped the biggest position of the 750 funds followed by Insider Monkey, comprising about $12.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $1.9 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Boot Barn Holdings Inc (NYSE:BOOT). These stocks are 8×8, Inc. (NYSE:EGHT), Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI), The Duckhorn Portfolio, Inc. (NYSE:NAPA), Hippo Holdings Inc. (NYSE:HIPO), Valaris Limited (NYSE:VAL), Sunstone Hotel Investors Inc (NYSE:Limited), and Belden Inc. (NYSE:BDC). 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
EGHT 27 787115 -2
SHI 3 13756 -2
NAPA 8 158134 -8
HIPO 23 88135 23
VAL 26 1059546 -3
SHO 23 136845 5
BDC 17 172826 2
Average 18.1 345194 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $345 million. That figure was $247 million in BOOT’s case. 8×8, Inc. (NYSE:EGHT) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Boot Barn Holdings Inc (NYSE:BOOT) is more popular among hedge funds. Our overall hedge fund sentiment score for BOOT is 83. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 31.1% in 2021 through December 9th but still managed to beat the market by 5.1 percentage points. Hedge funds were also right about betting on BOOT as the stock returned 42.8% since the end of September (through 12/9) 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.