We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of American Outdoor Brands Corporation (NASDAQ:AOBC) based on that data.
Is American Outdoor Brands Corporation (NASDAQ:AOBC) a healthy stock for your portfolio? Hedge funds are selling. The number of bullish hedge fund bets shrunk by 5 in recent months. Our calculations also showed that AOBC isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s go over the key hedge fund action surrounding American Outdoor Brands Corporation (NASDAQ:AOBC).
What does the smart money think about American Outdoor Brands Corporation (NASDAQ:AOBC)?
Heading into the first quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -26% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in AOBC a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in American Outdoor Brands Corporation (NASDAQ:AOBC) was held by Renaissance Technologies, which reported holding $43.5 million worth of stock at the end of December. It was followed by D E Shaw with a $29.1 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and Two Sigma Advisors.
Since American Outdoor Brands Corporation (NASDAQ:AOBC) has faced declining sentiment from the aggregate hedge fund industry, we can see that there were a few funds that slashed their positions entirely by the end of the third quarter. Intriguingly, Israel Englander’s Millennium Management said goodbye to the largest stake of the “upper crust” of funds watched by Insider Monkey, worth an estimated $31.3 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund sold off about $1.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as American Outdoor Brands Corporation (NASDAQ:AOBC) but similarly valued. These stocks are FARO Technologies, Inc. (NASDAQ:FARO), SunPower Corporation (NASDAQ:SPWR), Jianpu Technology Inc. (NYSE:JT), and Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH). This group of stocks’ market caps are similar to AOBC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $109 million in AOBC’s case. Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) is the most popular stock in this table. On the other hand Jianpu Technology Inc. (NYSE:JT) is the least popular one with only 5 bullish hedge fund positions. American Outdoor Brands Corporation (NASDAQ:AOBC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AOBC wasn’t nearly as popular as these 15 stock and hedge funds that were betting on AOBC were disappointed as the stock returned -25% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.