The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded YETI Holdings, Inc. (NYSE:YETI) and determine whether the smart money was really smart about this stock.
YETI Holdings, Inc. (NYSE:YETI) investors should pay attention to an increase in support from the world’s most elite money managers lately. YETI Holdings, Inc. (NYSE:YETI) was in 22 hedge funds’ portfolios at the end of June. The all time high for this statistics is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 20 hedge funds in our database with YETI positions at the end of the first quarter. Our calculations also showed that YETI 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.
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, 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 lithium company which could also 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 we’re going to view the new hedge fund action encompassing YETI Holdings, Inc. (NYSE:YETI).
Hedge fund activity in YETI Holdings, Inc. (NYSE:YETI)
Heading into the third quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in YETI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in YETI Holdings, Inc. (NYSE:YETI) was held by Columbus Circle Investors, which reported holding $29.9 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $24.1 million position. Other investors bullish on the company included Marshall Wace LLP, Shellback Capital, and Scopus Asset Management. In terms of the portfolio weights assigned to each position MIK Capital allocated the biggest weight to YETI Holdings, Inc. (NYSE:YETI), around 4% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, earmarking 3.19 percent of its 13F equity portfolio to YETI.
Consequently, specific money managers were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, established the largest position in YETI Holdings, Inc. (NYSE:YETI). Scopus Asset Management had $21.4 million invested in the company at the end of the quarter. Kamyar Khajavi’s MIK Capital also initiated a $7.2 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, and Jonathan Dawson’s Southport Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as YETI Holdings, Inc. (NYSE:YETI) but similarly valued. We will take a look at Flowserve Corporation (NYSE:FLS), Grocery Outlet Holding Corp. (NASDAQ:GO), Tempur Sealy International Inc. (NYSE:TPX), Dicks Sporting Goods Inc (NYSE:DKS), Ultrapar Participacoes SA (NYSE:UGP), RLI Corp. (NYSE:RLI), and Agios Pharmaceuticals Inc (NASDAQ:AGIO). This group of stocks’ market valuations are closest to YETI’s market valuation.
|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 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $155 million in YETI’s case. Tempur Sealy International Inc. (NYSE:TPX) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 7 bullish hedge fund positions. YETI Holdings, Inc. (NYSE:YETI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for YETI is 56.2. 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. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately YETI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); YETI investors were disappointed as the stock returned 6.1% in the third 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.