Last year’s fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 37.4% in 2019 (through the end of November) and outperformed the S&P 500 ETF by 9.9 percentage points. We are done processing the latest 13F filings and in this article we will study how hedge fund sentiment towards Vista Outdoor Inc (NYSE:VSTO) changed during the first quarter.
Vista Outdoor Inc (NYSE:VSTO) has seen a decrease in enthusiasm from smart money in recent months. VSTO was in 14 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with VSTO holdings at the end of the previous quarter. Our calculations also showed that VSTO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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David E. Shaw of D.E. Shaw
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What does smart money think about Vista Outdoor Inc (NYSE:VSTO)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VSTO over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Gates Capital Management held the most valuable stake in Vista Outdoor Inc (NYSE:VSTO), which was worth $32.8 million at the end of the third quarter. On the second spot was Mountain Lake Investment Management which amassed $9.3 million worth of shares. D E Shaw, Renaissance Technologies, and Arrowstreet 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 Mountain Lake Investment Management allocated the biggest weight to Vista Outdoor Inc (NYSE:VSTO), around 4.7% of its 13F portfolio. Gates Capital Management is also relatively very bullish on the stock, setting aside 1.42 percent of its 13F equity portfolio to VSTO.
Because Vista Outdoor Inc (NYSE:VSTO) has experienced bearish sentiment from the smart money, it’s easy to see that there were a few money managers that decided to sell off their positions entirely last quarter. Intriguingly, Peter Muller’s PDT Partners dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $0.8 million in stock, and Gregg J. Powers’s Private Capital Management was right behind this move, as the fund cut about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Vista Outdoor Inc (NYSE:VSTO). These stocks are EZCORP Inc (NASDAQ:EZPW), X Financial (NYSE:XYF), West Bancorporation, Inc. (NASDAQ:WTBA), and Global Indemnity Limited (NASDAQ:GBLI). This group of stocks’ market values match VSTO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EZPW | 18 | 81131 | -3 |
| XYF | 2 | 1574 | -1 |
| WTBA | 4 | 9449 | 0 |
| GBLI | 6 | 25237 | 0 |
| Average | 7.5 | 29348 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $69 million in VSTO’s case. EZCORP Inc (NASDAQ:EZPW) is the most popular stock in this table. On the other hand X Financial (NYSE:XYF) is the least popular one with only 2 bullish hedge fund positions. Vista Outdoor Inc (NYSE:VSTO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on VSTO as the stock returned 33.8% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
