Is Big 5 Sporting Goods Corporation (NASDAQ:BGFV) the right investment to pursue these days? The best stock pickers are taking a bullish view. The number of long hedge fund bets improved by 3 recently.
To most stock holders, hedge funds are viewed as underperforming, outdated financial tools of years past. While there are over 8000 funds trading today, we choose to focus on the elite of this club, about 450 funds. Most estimates calculate that this group controls the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their highest performing stock picks, we have deciphered a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as key, bullish insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are plenty of reasons for an executive to sell shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).
With these “truths” under our belt, we’re going to take a look at the latest action encompassing Big 5 Sporting Goods Corporation (NASDAQ:BGFV).
How are hedge funds trading Big 5 Sporting Goods Corporation (NASDAQ:BGFV)?
Heading into 2013, a total of 11 of the hedge funds we track were long in this stock, a change of 38% from the third quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially.
When looking at the hedgies we track, Alexander Medina Seaver’s Stadium Capital Management had the biggest position in Big 5 Sporting Goods Corporation (NASDAQ:BGFV), worth close to $44.2 million, comprising 10.5% of its total 13F portfolio. The second largest stake is held by MFP Investors, managed by Michael Price, which held a $4.6 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Mario Gabelli’s GAMCO Investors, Joel Greenblatt’s Gotham Asset Management and Ken Griffin’s Citadel Investment Group.
Now, key money managers have jumped into Big 5 Sporting Goods Corporation (NASDAQ:BGFV) headfirst. Gotham Asset Management, managed by Joel Greenblatt, initiated the largest position in Big 5 Sporting Goods Corporation (NASDAQ:BGFV). Gotham Asset Management had 1.6 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also made a $0.9 million investment in the stock during the quarter. The other funds with brand new BGFV positions are Jim Simons’s Renaissance Technologies and Steven Cohen’s SAC Capital Advisors.
What do corporate executives and insiders think about Big 5 Sporting Goods Corporation (NASDAQ:BGFV)?
Insider buying is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time frame, Big 5 Sporting Goods Corporation (NASDAQ:BGFV) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Big 5 Sporting Goods Corporation (NASDAQ:BGFV). These stocks are Sport Chalet, Inc. (NASDAQ:SPCHB), Dover Saddlery, Inc. (NASDAQ:DOVR), Dicks Sporting Goods Inc (NYSE:DKS), Cabelas Inc (NYSE:CAB), and Hibbett Sports, Inc. (NASDAQ:HIBB). All of these stocks are in the sporting goods stores industry and their market caps are similar to BGFV’s market cap.