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Hedge Funds Have Never Been This Bullish On Burlington Stores Inc (BURL)

In this article you are going to find out whether hedge funds think Burlington Stores Inc (NYSE:BURL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Burlington Stores Inc (NYSE:BURL) a healthy stock for your portfolio? Investors who are in the know are buying. The number of long hedge fund positions rose by 4 in recent months. Our calculations also showed that BURL 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). BURL was in 40 hedge funds’ portfolios at the end of the first quarter of 2020. There were 36 hedge funds in our database with BURL holdings at the end of the previous quarter.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dan Loeb THIRD POINT

Dan Loeb of Third Point

At Insider Monkey 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 this one. 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 peek at the latest hedge fund action encompassing Burlington Stores Inc (NYSE:BURL).

How are hedge funds trading Burlington Stores Inc (NYSE:BURL)?

At the end of the first quarter, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in BURL 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.

The largest stake in Burlington Stores Inc (NYSE:BURL) was held by Adage Capital Management, which reported holding $211.3 million worth of stock at the end of September. It was followed by Third Point with a $178.3 million position. Other investors bullish on the company included Samlyn Capital, Dorsal Capital Management, and Armistice Capital. In terms of the portfolio weights assigned to each position Dorsal Capital Management allocated the biggest weight to Burlington Stores Inc (NYSE:BURL), around 6.09% of its 13F portfolio. MIK Capital is also relatively very bullish on the stock, designating 3.87 percent of its 13F equity portfolio to BURL.

As one would reasonably expect, some big names have jumped into Burlington Stores Inc (NYSE:BURL) headfirst. Samlyn Capital, managed by Robert Pohly, created the most outsized position in Burlington Stores Inc (NYSE:BURL). Samlyn Capital had $104.4 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also initiated a $40.9 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, James Parsons’s Junto Capital Management, and Kamyar Khajavi’s MIK Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Burlington Stores Inc (NYSE:BURL) but similarly valued. We will take a look at Liberty Global plc (NASDAQ:LBTYA), Insulet Corporation (NASDAQ:PODD), Occidental Petroleum Corporation (NYSE:OXY), and Pembina Pipeline Corp (NYSE:PBA). This group of stocks’ market values resemble BURL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LBTYA 30 812772 3
PODD 36 648302 2
OXY 35 1384528 -9
PBA 15 52363 -2
Average 29 724491 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $724 million. That figure was $938 million in BURL’s case. Insulet Corporation (NASDAQ:PODD) is the most popular stock in this table. On the other hand Pembina Pipeline Corp (NYSE:PBA) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Burlington Stores Inc (NYSE:BURL) 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 BURL as the stock returned 32.3% 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.