Is Boot Barn Holdings (BOOT) A Smart Long-Term Buy?

Wasatch Global Investors, an investment management firm, published its “Wasatch Small Cap Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 6.32% was recorded by the fund’s investor class for the Q2 of 2021, outperforming the benchmarks, Russell 2000 Growth Index, that increased 3.92%, and the Russell 2000 Index that rose to 4.29% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Wasatch Global Investors, the fund mentioned Boot Barn Holdings, Inc. (NYSE: BOOT) and discussed its stance on the firm. Boot Barn Holdings, Inc. is an Irvine, California-based work-related footwear, apparel, and accessories retailer with a $2.6 billion market capitalization. BOOT delivered a 106.18% return since the beginning of the year, while its 12-month returns are up by 225.45%. The stock closed at $91.38 per share on September 16, 2021.

Here is what Wasatch Global Investors has to say about Boot Barn Holdings, Inc. in its Q2 2021 investor letter:

Boot Barn Holdings, Inc. (BOOT) was also a large contributor. The company is a specialty retailer offering increasingly popular Western and work-related apparel, footwear and accessories. Boots are somewhat resistant to online competition because they often require specialized fitting. The company has benefited from its economies of scale and multi-channel business model, which kept revenues flowing during virus-related shutdowns. Stimulus payments by the federal government to consumers appear to have helped as well. Boot Barn’s private-label brands, built around wellknown personalities in the music business, have enabled the company to convert higher portions of its sales revenues into bottom-line profits.”



Based on our calculations, Boot Barn Holdings, Inc. (NYSE: BOOT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. BOOT was in 29 hedge fund portfolios at the end of the first half of 2021, compared to 18 funds in the previous quarter. Boot Barn Holdings, Inc. (NYSE: BOOT) delivered a 15.11% return in the past 3 months.

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 115 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.

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