In this article we will analyze whether Dicks Sporting Goods Inc (NYSE:DKS) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is DKS a good stock to buy now? The smart money was turning bullish. The number of bullish hedge fund bets advanced by 1 in recent months. Dicks Sporting Goods Inc (NYSE:DKS) was in 41 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. Our calculations also showed that DKS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are dozens of methods shareholders can use to appraise their holdings. Two of the less utilized methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the broader indices by a significant amount (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to go over the new hedge fund action surrounding Dicks Sporting Goods Inc (NYSE:DKS).
Do Hedge Funds Think DKS Is A Good Stock To Buy Now?
At Q3’s end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in DKS a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Dicks Sporting Goods Inc (NYSE:DKS) was held by Citadel Investment Group, which reported holding $75.2 million worth of stock at the end of September. It was followed by AQR Capital Management with a $61.2 million position. Other investors bullish on the company included Holocene Advisors, Two Sigma Advisors, and Tensile Capital. In terms of the portfolio weights assigned to each position Tensile Capital allocated the biggest weight to Dicks Sporting Goods Inc (NYSE:DKS), around 6.5% of its 13F portfolio. MIK Capital is also relatively very bullish on the stock, earmarking 5.72 percent of its 13F equity portfolio to DKS.
With a general bullishness amongst the heavyweights, some big names have jumped into Dicks Sporting Goods Inc (NYSE:DKS) headfirst. Woodson Capital Management, managed by James Woodson Davis, assembled the biggest position in Dicks Sporting Goods Inc (NYSE:DKS). Woodson Capital Management had $36.7 million invested in the company at the end of the quarter. Ken Heebner’s Capital Growth Management also initiated a $27.5 million position during the quarter. The following funds were also among the new DKS investors: Steven Boyd’s Armistice Capital, Renaissance Technologies, and Kamyar Khajavi’s MIK Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Dicks Sporting Goods Inc (NYSE:DKS) but similarly valued. These stocks are Flowers Foods, Inc. (NYSE:FLO), Tetra Tech, Inc. (NASDAQ:TTEK), Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), Sonoco Products Company (NYSE:SON), Blueprint Medicines Corporation (NASDAQ:BPMC), ITT Inc. (NYSE:ITT), and BlackLine, Inc. (NASDAQ:BL). This group of stocks’ market values are similar to DKS’s market value.
|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 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $626 million in DKS’s case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Dicks Sporting Goods Inc (NYSE:DKS) is more popular among hedge funds. Our overall hedge fund sentiment score for DKS is 84. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Unfortunately DKS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DKS were disappointed as the stock returned -8.1% since the end of the third quarter (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.