Is Cabelas Inc (NYSE:CAB) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. 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 find the latest market-moving information. So let’s see what they have to say about Cabelas.
Cabelas Inc (NYSE:CAB) was in 23 hedge funds’ portfolios at the end of September. CAB shareholders have witnessed a decrease in hedge fund sentiment of late. There were 29 hedge funds in our database with CAB positions at the end of the previous quarter.
To the average investor there are several formulas stock traders can use to appraise publicly-traded companies. Two of the most useful formulas are hedge fund and insider trading sentiment. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the best picks of the best fund managers can trounce their index-focused peers by a superb margin (see the details here).
Now, let’s take a look at the key action regarding Cabelas Inc (NYSE:CAB).
Hedge fund activity in Cabelas Inc (NYSE:CAB)
Heading into Q4, a total of 23 of the hedge funds tracked by Insider Monkey were long in this stock, a change of -21% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully.
According to the database of hedge funds maintained by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in Cabelas Inc (NYSE:CAB). Millennium Management has a $122 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting in second is Hirzel Capital Management, led by Zac Hirzel, holding a $67.2 million position; 9.6% of its 13F portfolio is allocated to the stock. Other peers that hold long positions encompass John Osterweis’ Osterweis Capital Management, Ken Fisher’s Fisher Asset Management and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Cabelas Inc (NYSE:CAB) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedgies who were dropping their entire positions last quarter. Intriguingly, Robert Joseph Caruso’s Select Equity Group sold off the largest investment of the 700 funds followed by Insider Monkey, valued at an estimated $107.4 million in stock, and Jim Simons of Renaissance Technologies was right behind this move, as the fund manager dropped about $8.9 million worth of shares. These transactions are interesting, as aggregate hedge fund interest dropped by six funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Cabelas Inc (NYSE:CAB). We will take a look at Research In Motion Ltd (NASDAQ:BBRY), LaSalle Hotel Properties (NYSE:LHO), Teledyne Technologies Incorporated (NYSE:TDY), and Aspen Technology, Inc. (NASDAQ:AZPN). All of these stocks’ market caps are closest to CAB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As we can see, Cabelas had the greatest decline in sentiment, even steeper than that of beleaguered BlackBerry. However, hedge funds’ share ownership remained fairly stable, with them holding 13.80% of Cabelas’ shares worth $443 million. With rumors surfacing today that Cabelas may seek to sell itself, the stock should look more attractive to event-driven investors. Otherwise, investors are not overly positive about the stock.
With the returns demonstrated by Insider Monkey’s tactics, retail investors should always pay attention to hedge fund sentiment, and Cabelas Inc (NYSE:CAB) applies perfectly to this mantra.