Hedge Funds Done Buying Sportsman’s Warehouse Holdings Inc (SPWH)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH).

Is Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) a buy, sell, or hold? The smart money is becoming less confident. The number of bullish hedge fund positions fell by 1 lately. Our calculations also showed that SPWH 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.

To most shareholders, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, Our experts hone in on the aristocrats of this group, approximately 850 funds. These money managers control the majority of the smart money’s total capital, and by tailing their finest equity investments, Insider Monkey has identified a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun 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 .

Carlo Cannell

J. Carlo Cannell of Cannell Capital

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the fresh hedge fund action regarding Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH).

What does smart money think about Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH)?

At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in SPWH 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.

Among these funds, Cannell Capital held the most valuable stake in Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH), which was worth $17.6 million at the end of the third quarter. On the second spot was Greenhouse Funds which amassed $12.8 million worth of shares. Driehaus Capital, Marshall Wace LLP, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cannell Capital allocated the biggest weight to Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH), around 7.34% of its 13F portfolio. Greenhouse Funds is also relatively very bullish on the stock, earmarking 3.1 percent of its 13F equity portfolio to SPWH.

Seeing as Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that slashed their positions entirely in the first quarter. Interestingly, Michael Burry’s Scion Asset Management said goodbye to the largest stake of the 750 funds watched by Insider Monkey, worth an estimated $5.5 million in stock. D. E. Shaw’s fund, D E Shaw, also said goodbye to its stock, about $4.8 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) but similarly valued. We will take a look at Landmark Infrastructure Partners LP (NASDAQ:LMRK), Equity Bancshares, Inc. (NASDAQ:EQBK), CRA International, Inc. (NASDAQ:CRAI), and Pure Cycle Corporation (NASDAQ:PCYO). This group of stocks’ market values resemble SPWH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LMRK 1 894 -1
EQBK 5 24525 0
CRAI 11 33945 -3
PCYO 14 39645 4
Average 7.75 24752 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $64 million in SPWH’s case. Pure Cycle Corporation (NASDAQ:PCYO) is the most popular stock in this table. On the other hand Landmark Infrastructure Partners LP (NASDAQ:LMRK) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on SPWH as the stock returned 81.3% so far in Q2 (through the end of May) 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.