Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Columbia Sportswear Company (NASDAQ:COLM).
Columbia Sportswear Company (NASDAQ:COLM) was in 15 hedge funds’ portfolios at the end of the first quarter of 2020. COLM investors should pay attention to a decrease in hedge fund interest in recent months. There were 23 hedge funds in our database with COLM holdings at the end of the previous quarter. Our calculations also showed that COLM 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 free email services without phone verification to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the fresh hedge fund action encompassing Columbia Sportswear Company (NASDAQ:COLM).
How are hedge funds trading Columbia Sportswear Company (NASDAQ:COLM)?
At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -35% from the fourth quarter of 2019. By comparison, 32 hedge funds held shares or bullish call options in COLM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Cliff Asness’s AQR Capital Management has the biggest position in Columbia Sportswear Company (NASDAQ:COLM), worth close to $21.3 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Richard Scott Greeder of Broad Bay Capital, with a $11.2 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Renaissance Technologies, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Broad Bay Capital allocated the biggest weight to Columbia Sportswear Company (NASDAQ:COLM), around 3.07% of its 13F portfolio. Beddow Capital Management is also relatively very bullish on the stock, earmarking 0.23 percent of its 13F equity portfolio to COLM.
Due to the fact that Columbia Sportswear Company (NASDAQ:COLM) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there were a few hedgies that elected to cut their entire stakes last quarter. Intriguingly, Ken Griffin’s Citadel Investment Group sold off the biggest investment of the 750 funds watched by Insider Monkey, comprising an estimated $34.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund cut about $15.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 8 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Columbia Sportswear Company (NASDAQ:COLM). These stocks are Hawaiian Electric Industries, Inc. (NYSE:HE), Rexford Industrial Realty Inc (NYSE:REXR), Trex Company, Inc. (NYSE:TREX), and Ares Capital Corporation (NASDAQ:ARCC). This group of stocks’ market caps are similar to COLM’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $52 million in COLM’s case. Ares Capital Corporation (NASDAQ:ARCC) is the most popular stock in this table. On the other hand Hawaiian Electric Industries, Inc. (NYSE:HE) is the least popular one with only 13 bullish hedge fund positions. Columbia Sportswear Company (NASDAQ:COLM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately COLM wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); COLM investors were disappointed as the stock returned 11.3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.