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 Burlington Stores Inc (NYSE:BURL) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Burlington Stores Inc (NYSE:BURL) a healthy stock for your portfolio? The smart money was betting on the stock. The number of long hedge fund positions increased by 2 lately. Burlington Stores Inc (NYSE:BURL) was in 45 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BURL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Phillip Gross of Adage Capital
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 take a glance at the recent hedge fund action surrounding Burlington Stores Inc (NYSE:BURL).
Do Hedge Funds Think BURL Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in BURL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Third Point was the largest shareholder of Burlington Stores Inc (NYSE:BURL), with a stake worth $448 million reported as of the end of September. Trailing Third Point was Alkeon Capital Management, which amassed a stake valued at $270.7 million. Adage Capital Management, Melvin Capital Management, and Citadel Investment Group 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 One01 Capital allocated the biggest weight to Burlington Stores Inc (NYSE:BURL), around 7.06% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, setting aside 5.11 percent of its 13F equity portfolio to BURL.
As aggregate interest increased, key hedge funds have been driving this bullishness. Melvin Capital Management, managed by Gabriel Plotkin, established the largest position in Burlington Stores Inc (NYSE:BURL). Melvin Capital Management had $134.7 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also made a $31.2 million investment in the stock during the quarter. The other funds with brand new BURL positions are Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw, and Gregg Moskowitz’s Interval Partners.
Let’s also examine hedge fund activity in other stocks similar to Burlington Stores Inc (NYSE:BURL). These stocks are Restaurant Brands International Inc (NYSE:QSR), Avangrid, Inc. (NYSE:AGR), Tradeweb Markets Inc. (NASDAQ:TW), Tyler Technologies, Inc. (NYSE:TYL), Hologic, Inc. (NASDAQ:HOLX), Ubiquiti Inc. (NYSE:UI), and Seagate Technology plc (NASDAQ:STX). This group of stocks’ market valuations resemble BURL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QSR | 22 | 1873877 | 0 |
| AGR | 9 | 37232 | -3 |
| TW | 22 | 135429 | 7 |
| TYL | 30 | 772769 | -3 |
| HOLX | 39 | 716983 | -2 |
| UI | 20 | 240246 | -3 |
| STX | 27 | 1806109 | -4 |
| Average | 24.1 | 797521 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $798 million. That figure was $1836 million in BURL’s case. Hologic, Inc. (NASDAQ:HOLX) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Burlington Stores Inc (NYSE:BURL) is more popular among hedge funds. Our overall hedge fund sentiment score for BURL is 87. 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, BURL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BURL were disappointed as the stock returned -16.4% 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.
