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 (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. 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 Hibbett Sports, Inc. (NASDAQ:HIBB) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Is Hibbett Sports, Inc. (NASDAQ:HIBB) the right investment to pursue these days? Prominent investors were in an optimistic mood. The number of long hedge fund bets rose by 4 in recent months. Hibbett Sports, Inc. (NASDAQ:HIBB) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistics is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that HIBB isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
In the eyes of most investors, hedge funds are assumed to be worthless, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, We choose to focus on the aristocrats of this club, around 850 funds. These investment experts direct the majority of all hedge funds’ total asset base, and by following their top stock picks, Insider Monkey has spotted several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We are also checking out this lithium company which could benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s take a gander at the recent hedge fund action surrounding Hibbett Sports, Inc. (NASDAQ:HIBB).
What have hedge funds been doing with Hibbett Sports, Inc. (NASDAQ:HIBB)?
At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in HIBB a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, GMT Capital held the most valuable stake in Hibbett Sports, Inc. (NASDAQ:HIBB), which was worth $26.9 million at the end of the third quarter. On the second spot was Intrinsic Edge Capital which amassed $14 million worth of shares. Renaissance Technologies, D E Shaw, 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 GMT Capital allocated the biggest weight to Hibbett Sports, Inc. (NASDAQ:HIBB), around 1.51% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 1.3 percent of its 13F equity portfolio to HIBB.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, created the most valuable position in Hibbett Sports, Inc. (NASDAQ:HIBB). Intrinsic Edge Capital had $14 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $2.6 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Lee Ainslie’s Maverick Capital, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hibbett Sports, Inc. (NASDAQ:HIBB) but similarly valued. We will take a look at Seres Therapeutics Inc (NASDAQ:MCRB), Kamada Ltd (NASDAQ:KMDA), Benefitfocus Inc (NASDAQ:BNFT), Casa Systems, Inc. (NASDAQ:CASA), Clarus Corporation (NASDAQ:CLAR), Allied Motion Technologies, Inc. (NASDAQ:AMOT), and Global Indemnity Group, LLC (NASDAQ:GBLI). This group of stocks’ market caps resemble HIBB’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 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $104 million in HIBB’s case. Clarus Corporation (NASDAQ:CLAR) is the most popular stock in this table. On the other hand Kamada Ltd (NASDAQ:KMDA) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Hibbett Sports, Inc. (NASDAQ:HIBB) is more popular among hedge funds. Our overall hedge fund sentiment score for HIBB is 89. 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 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 24.8% in 2020 through the end of September but still managed to beat the market by 19.3 percentage points. Hedge funds were also right about betting on HIBB as the stock returned 87.3% since the end of June 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.