Were Hedge Funds Illusioned With Deckers Outdoor Corp (DECK)?

Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Deckers Outdoor Corp (NYSE:DECK) at the end of the third quarter and determine whether the smart money was really smart about this stock.

Is Deckers Outdoor Corp (NYSE:DECK) an excellent investment right now? Money managers were getting more bullish. The number of bullish hedge fund bets increased by 4 recently. Deckers Outdoor Corp (NYSE:DECK) was in 48 hedge funds’ portfolios at the end of September. The all time high for this statistic is 54. Our calculations also showed that DECK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 44 hedge funds in our database with DECK holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to check out the recent hedge fund action surrounding Deckers Outdoor Corp (NYSE:DECK).

David Brown Hawk Ridge Partners

David Brown of Hawk Ridge Management

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

At Q3’s end, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in DECK over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Steadfast Capital Management, managed by Robert Pitts, holds the most valuable position in Deckers Outdoor Corp (NYSE:DECK). Steadfast Capital Management has a $297.3 million position in the stock, comprising 2.9% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $169.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Gavin Baker’s Atreides Management, James Parsons’s Junto Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position 59 North Capital allocated the biggest weight to Deckers Outdoor Corp (NYSE:DECK), around 17.87% of its 13F portfolio. One01 Capital is also relatively very bullish on the stock, setting aside 7.69 percent of its 13F equity portfolio to DECK.

Consequently, specific money managers were leading the bulls’ herd. Scopus Asset Management, managed by Alexander Mitchell, established the most outsized position in Deckers Outdoor Corp (NYSE:DECK). Scopus Asset Management had $27 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $26 million investment in the stock during the quarter. The other funds with brand new DECK positions are David Brown’s Hawk Ridge Management, Alexander Mitchell’s Scopus Asset Management, and Jinghua Yan’s TwinBeech Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Deckers Outdoor Corp (NYSE:DECK) but similarly valued. We will take a look at Five Below Inc (NASDAQ:FIVE), Cleveland-Cliffs Inc (NYSE:CLF), Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), Guidewire Software Inc (NYSE:GWRE), Hill-Rom Holdings, Inc. (NYSE:HRC), Intellia Therapeutics, Inc. (NASDAQ:NTLA), and Levi Strauss & Co. (NYSE:LEVI). This group of stocks’ market values are closest to DECK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FIVE 40 996155 -2
CLF 35 682055 -9
NCLH 36 502017 -7
GWRE 26 2005849 -1
HRC 46 1410210 24
NTLA 37 1620289 -4
LEVI 26 225120 -4
Average 35.1 1063099 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $1063 million. That figure was $1213 million in DECK’s case. Hill-Rom Holdings, Inc. (NYSE:HRC) is the most popular stock in this table. On the other hand Guidewire Software Inc (NYSE:GWRE) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Deckers Outdoor Corp (NYSE:DECK) is more popular among hedge funds. Our overall hedge fund sentiment score for DECK is 85.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, DECK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DECK were disappointed as the stock returned -11.1% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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