Is DICK’S Sporting Goods (DKS) a Great Investment Choice?

Baron Funds, an asset management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. The first quarter of 2022 has been a difficult one for many mutual funds, especially for funds like Baron mutual funds which have significant investments in rapidly growing technology businesses. Current market volatility and lower stock prices are principally a consequence of persistent above-normal inflation. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022. 

In its Q1 2022 investor letter, Baron Fund mentioned DICK’S Sporting Goods, Inc. (NYSE:DKS) and explained its insights for the company. Founded in 1948, DICK’S Sporting Goods, Inc. (NYSE:DKS) is a Coraopolis, Pennsylvania-based sporting goods retail company with a $6.4 billion market capitalization. DICK’S Sporting Goods, Inc. (NYSE:DKS) delivered a -30.02% return since the beginning of the year, while its 12-month returns are down by -18.95%. The stock closed at $80.47 per share on June 08, 2022.

Here is what Baron Fund has to say about DICK’S Sporting Goods, Inc. (NYSE:DKS) in its Q1 2022 investor letter:

Dick’s Sporting Goods, Inc. was the first stock Michael recommended to us shortly after he joined Baron Capital in 2003. Dick’s share price has since increased about nine-fold. Unfortunately, we sold our investment in Dick’s about six years ago and, although it was a successful investment, we did not realize the full benefit of Michael’s recommendation. We sold too soon because I was concerned that competition from internet retailers would have a permanent negative impact on Dick’s stores’ profitability. I was wrong. Dick’s stock price so far has about doubled after we sold…and its prospects have brightened!

We sold even though we considered Ed Stack, Dick’s Chairm”n and CEO, a terrific retailer, a great entrepreneur and a special person. Ed had built Dick’s from three bait and tackle stores his dad started into a uniquely positioned, nationwide chain of 730 sporting goods stores. In fact, Dick’s is now the largest nationwide sporting goods chain. Ed had purchased the three bait and tackle stores, the foundation of Dick’s business, from his dad. Ed’s mother loaned him the money to buy his dad’s stores! I’m not exactly sure what that signifies. But it may have something to do with Carl Icahn’s proclamation that “everything I have is for sale except my children…and maybe my wife.”

Ed and his newly appointed CEO Lauren Hobart visited us last month. Ed asked for the meeting to introduce us to Lauren, as well as to discuss the prospects for Dick’s new, large format stores with attached outdoor, student athletic fields. Lauren then described how well its new format stores were doing in two smaller communities. We also spoke about the successes of Dick’s omni-channel retailing efforts and how desirable Dick‘s stores have become to shopping centers trying to lure shoppers to return to their malls.”

Our calculations show that DICK’S Sporting Goods, Inc. (NYSE:DKS) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. DICK’S Sporting Goods, Inc. (NYSE:DKS) was in 31 hedge fund portfolios at the end of the first quarter of 2022, compared to 37 funds in the previous quarter. DICK’S Sporting Goods, Inc. (NYSE:DKS) delivered a -26.09% return in the past 3 months.

In March 2022, we published an article that includes DICK’S Sporting Goods, Inc. (NYSE:DKS) in  The Only 10 Stocks Billionaire David Tepper Was Buying in Q4. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

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