Was The Smart Money Right About Boot Barn Holdings Inc (BOOT)?

Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March. In this article, we will take a closer look at hedge fund sentiment towards Boot Barn Holdings Inc (NYSE:BOOT).

Is Boot Barn Holdings Inc (NYSE:BOOT) worth your attention right now? Hedge funds are getting more bullish. The number of bullish hedge fund bets inched up by 5 in recent months. Our calculations also showed that BOOT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). BOOT was in 28 hedge funds’ portfolios at the end of December. There were 23 hedge funds in our database with BOOT positions at the end of the previous quarter.

Richard Driehaus of Driehaus Capital

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the “next Amazon” in this video; again we are listening. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the fresh hedge fund action surrounding Boot Barn Holdings Inc (NYSE:BOOT).

What have hedge funds been doing with Boot Barn Holdings Inc (NYSE:BOOT)?

At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BOOT over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Boot Barn Holdings Inc (NYSE:BOOT) was held by Driehaus Capital, which reported holding $31.4 million worth of stock at the end of September. It was followed by Shellback Capital with a $24.6 million position. Other investors bullish on the company included Half Sky Capital, Intrinsic Edge Capital, and Columbus Circle Investors. In terms of the portfolio weights assigned to each position Half Sky Capital allocated the biggest weight to Boot Barn Holdings Inc (NYSE:BOOT), around 10.24% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, earmarking 6.79 percent of its 13F equity portfolio to BOOT.

Consequently, specific money managers have jumped into Boot Barn Holdings Inc (NYSE:BOOT) headfirst. Six Columns Capital, managed by Brad Stephens, created the largest position in Boot Barn Holdings Inc (NYSE:BOOT). Six Columns Capital had $8.4 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $6.4 million investment in the stock during the quarter. The other funds with new positions in the stock are John Osterweis’s Osterweis Capital Management, Brian Scudieri’s Kehrs Ridge Capital, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks similar to Boot Barn Holdings Inc (NYSE:BOOT). These stocks are Amerisafe, Inc. (NASDAQ:AMSF), Health Catalyst, Inc (NASDAQ:HCAT), The E.W. Scripps Company (NASDAQ:SSP), and SM Energy Company (NYSE:SM). This group of stocks’ market valuations are similar to BOOT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMSF 10 35236 -4
HCAT 8 37534 -5
SSP 12 149633 -5
SM 22 126463 1
Average 13 87217 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $155 million in BOOT’s case. SM Energy Company (NYSE:SM) is the most popular stock in this table. On the other hand Health Catalyst, Inc (NASDAQ:HCAT) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Boot Barn Holdings Inc (NYSE:BOOT) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st and still beat the market by 12.9 percentage points. Unfortunately BOOT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BOOT were disappointed as the stock returned -59.5% during the four months of 2020 (through May 1st) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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