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Hedge Funds Never Been This Bullish On Deckers Outdoor Corp (DECK)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Deckers Outdoor Corp (NYSE:DECK) based on that data and determine whether they were really smart about the stock.

Deckers Outdoor Corp (NYSE:DECK) has seen an increase in hedge fund sentiment recently. Deckers Outdoor Corp (NYSE:DECK) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DECK 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.

According to most stock holders, hedge funds are assumed to be unimportant, old financial tools of years past. While there are over 8000 funds in operation at present, Our experts choose to focus on the elite of this club, approximately 850 funds. These investment experts orchestrate bulk of all hedge funds’ total asset base, and by tailing their unrivaled stock picks, Insider Monkey has formulated various investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy outperformed 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 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 .

Ken Heebner of Capital Growth Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now we’re going to take a look at the latest hedge fund action regarding Deckers Outdoor Corp (NYSE:DECK).

How are hedge funds trading Deckers Outdoor Corp (NYSE:DECK)?

At the end of the second quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 52% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DECK over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Melvin Capital Management held the most valuable stake in Deckers Outdoor Corp (NYSE:DECK), which was worth $142.4 million at the end of the third quarter. On the second spot was Steadfast Capital Management which amassed $104.2 million worth of shares. AQR Capital Management, Renaissance Technologies, and Woodson Capital Management 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 Miura Global Management allocated the biggest weight to Deckers Outdoor Corp (NYSE:DECK), around 7.78% of its 13F portfolio. Woodson Capital Management is also relatively very bullish on the stock, earmarking 5.29 percent of its 13F equity portfolio to DECK.

Consequently, key money managers have jumped into Deckers Outdoor Corp (NYSE:DECK) headfirst. Steadfast Capital Management, managed by Robert Pitts, initiated the biggest position in Deckers Outdoor Corp (NYSE:DECK). Steadfast Capital Management had $104.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $20 million position during the quarter. The following funds were also among the new DECK investors: Ken Heebner’s Capital Growth Management, Angela Aldrich’s Bayberry Capital Partners, and David Ma’s Composite Capital.

Let’s also examine hedge fund activity in other stocks similar to Deckers Outdoor Corp (NYSE:DECK). These stocks are Steel Dynamics, Inc. (NASDAQ:STLD), CACI International Inc (NYSE:CACI), Pearson PLC (NYSE:PSO), Arrow Electronics, Inc. (NYSE:ARW), Quanta Services Inc (NYSE:PWR), BWX Technologies Inc (NYSE:BWXT), and Reinsurance Group of America Inc (NYSE:RGA). This group of stocks’ market valuations are closest to DECK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STLD 30 370392 3
CACI 34 395916 9
PSO 7 14870 -1
ARW 29 531930 6
PWR 31 624315 3
BWXT 27 141453 3
RGA 33 240555 3
Average 27.3 331347 3.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $858 million in DECK’s case. CACI International Inc (NYSE:CACI) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Deckers Outdoor Corp (NYSE:DECK) is more popular among hedge funds. Our overall hedge fund sentiment score for DECK is 90. 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 gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately DECK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on DECK were disappointed as the stock returned 3.8% since the end of the second 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.

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Disclosure: None. This article was originally published at Insider Monkey.