“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Hibbett Sports, Inc. (NASDAQ:HIBB) and see how it was affected.
Is Hibbett Sports, Inc. (NASDAQ:HIBB) a first-rate investment now? The smart money is taking a bearish view. The number of bullish hedge fund positions decreased by 1 lately. Our calculations also showed that HIBB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are numerous gauges market participants can use to assess their stock investments. Some of the most innovative gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the S&P 500 by a significant amount (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the latest hedge fund action regarding Hibbett Sports, Inc. (NASDAQ:HIBB).
How have hedgies been trading Hibbett Sports, Inc. (NASDAQ:HIBB)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HIBB over the last 17 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Hibbett Sports, Inc. (NASDAQ:HIBB) was held by Renaissance Technologies, which reported holding $26.7 million worth of stock at the end of September. It was followed by D E Shaw with a $22.6 million position. Other investors bullish on the company included Arrowstreet Capital, Balyasny Asset Management, and GLG Partners. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Hibbett Sports, Inc. (NASDAQ:HIBB), around 0.4% of its 13F portfolio. Ellington is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to HIBB.
Since Hibbett Sports, Inc. (NASDAQ:HIBB) has witnessed bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedge funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Lee Ainslie’s Maverick Capital sold off the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $1.7 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dumped about $1.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.
Let’s go over 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 Unifi, Inc. (NYSE:UFI), Hingham Institution for Savings (NASDAQ:HIFS), Teekay Corporation (NYSE:TK), and Zix Corporation (NASDAQ:ZIXI). This group of stocks’ market caps match 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 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $81 million in HIBB’s case. Zix Corporation (NASDAQ:ZIXI) is the most popular stock in this table. On the other hand Hingham Institution for Savings (NASDAQ:HIFS) is the least popular one with only 5 bullish hedge fund positions. Hibbett Sports, Inc. (NASDAQ:HIBB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on HIBB as the stock returned 23.9% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.