5. Dick’s Sporting Goods, Inc. (NYSE:DKS)
Number of Hedge Fund Holders: 35
Dick’s Sporting Goods, Inc. (NYSE:DKS) is an omnichannel sports goods retailer that serves outdoor and fitness enthusiasts and athletes. It operates more than 850 Golf Galaxy, DICK’s Sporting Goods, Public Lands, Going Going Gone!, Moosejaw, and Warehouse Sale stores. The company carries an elaborate array of national brands, including Columbia, Adidas, Brooks, Carhartt, Hoka, Jordan, Nike, New Balance, and more. The company also operates Dick’s House of Sport, Golf Galaxy Performance Center, and GameChanger.
The company’s fiscal Q3 2024 earnings showed a 4.2% increase in comparable same-store sales. This growth was attributed to its four strategic pillars: deep engagement with the DICK’s brand, differentiated product assortment, omnichannel athlete experience, and knowledgeable teammates. Dick’s Sporting Goods, Inc. (NYSE:DKS) is continuing to invest in its digital and store experience, focusing on increased product knowledge, service, and training to engage with its athletes and customers.
It is also focusing on its expansion strategies. The company opened three Dick’s House of Sport locations in fiscal Q3 2024 and two more in November, bringing the total to 19 open stores ahead of the holiday season. It plans to continue its growth initiatives in 2025 and open around six Health and Support locations. This puts it on track to attain around 75-100 locations by 2027.
Emeth Value Capital made the following comment about DICK’S Sporting Goods, Inc. (NYSE:DKS) in its Q2 2023 investor letter:
“For as often as the phrase “a private equity approach to public markets” is repeated, it is surprising to observe the great divide that exists between even very sophisticated long-term investors in public and private markets. There is perhaps no more well-trodden battleground than that of valuation marks. Public investors, particularly in times of market stress, are quick to express frustration that private equity portfolios are not marked to market. The title of Cliff Asness’ recent opinion piece in Institutional Investor captures the sentiment well, “Why Does Private Equity Get to Play Make-Believe With Prices?”. The level of discontent is surprising for two reasons: first, the difference in methodology is quite easily understood, and second, contrary to public markets gospel, it is evident that liquidity and the discovery of value are in no way synonymous. Indeed, they may be opposing forces more often than not. At the risk of oversimplifying, one can think of private equity marks as single-variable valuations, while public equity marks are dual-variable valuations. Both incorporate the level of earnings in a business, but while multiples are held relatively constant in private equity marks, public market marks also incorporate sentiment in the form of a changing multiple. The problem is that Mr. Market tends to change his opinion quite often. Consider the case of one of our former portfolio companies, DICK’S Sporting Goods, Inc. (NYSE:DKS)…” (Click here to read the full text)
