Was The Smart Money Right About Dicks Sporting Goods Inc (DKS)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Dicks Sporting Goods Inc (NYSE:DKS).

Is Dicks Sporting Goods Inc (NYSE:DKS) a great investment right now? Hedge funds were becoming hopeful. The number of bullish hedge fund positions improved by 1 lately. Dicks Sporting Goods Inc (NYSE:DKS) was in 42 hedge funds’ portfolios at the end of the fourth 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 Q4 rankings). There were 41 hedge funds in our database with DKS positions at the end of the third quarter.

In the eyes of most market participants, hedge funds are assumed to be underperforming, outdated investment vehicles of years past. While there are over 8000 funds with their doors open today, Our experts hone in on the upper echelon of this club, about 850 funds. These investment experts control bulk of all hedge funds’ total capital, and by shadowing their finest picks, Insider Monkey has figured out several investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to view the latest hedge fund action surrounding Dicks Sporting Goods Inc (NYSE:DKS).

Do Hedge Funds Think DKS Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in DKS a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is DKS A Good Stock To Buy?

More specifically, Atreides Management was the largest shareholder of Dicks Sporting Goods Inc (NYSE:DKS), with a stake worth $92.8 million reported as of the end of December. Trailing Atreides Management was Samlyn Capital, which amassed a stake valued at $91.2 million. Balyasny Asset Management, AQR Capital Management, and Carlson Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tensile Capital allocated the biggest weight to Dicks Sporting Goods Inc (NYSE:DKS), around 5.14% of its 13F portfolio. MIK Capital is also relatively very bullish on the stock, designating 5.11 percent of its 13F equity portfolio to DKS.

As one would reasonably expect, key hedge funds have been driving this bullishness. Atreides Management, managed by Gavin Baker, initiated the most valuable position in Dicks Sporting Goods Inc (NYSE:DKS). Atreides Management had $92.8 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also made a $91.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Anand Parekh’s Alyeska Investment Group, Robert Bishop’s Impala Asset Management, and Larry Foley and Paul Farrell’s Bronson Point Partners.

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 MasTec, Inc. (NYSE:MTZ), Brooks Automation, Inc. (NASDAQ:BRKS), Kemper Corporation (NYSE:KMPR), Emcor Group Inc (NYSE:EME), Digital Turbine Inc (NASDAQ:APPS), Medallia, Inc. (NYSE:MDLA), and Regal Beloit Corporation (NYSE:RBC). All of these stocks’ market caps are closest to DKS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTZ 32 349801 -3
BRKS 25 173905 8
KMPR 13 44437 -5
EME 25 169975 -4
APPS 23 318095 0
MDLA 21 428312 -3
RBC 25 308385 0
Average 23.4 256130 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $711 million in DKS’s case. MasTec, Inc. (NYSE:MTZ) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 13 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 84.6. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on DKS as the stock returned 47.6% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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