Hedge Funds Are Betting On Big 5 Sporting Goods Corporation (BGFV)

Is Big 5 Sporting Goods Corporation (NASDAQ:BGFV) a sound investment now? Hedge funds are buying. The number of bullish hedge fund positions inched up by 3 in recent months.

According to most market participants, hedge funds are seen as worthless, old investment tools of the past. While there are more than 8000 funds trading at present, we at Insider Monkey hone in on the moguls of this club, around 450 funds. Most estimates calculate that this group controls the majority of all hedge funds’ total asset base, and by watching their highest performing investments, we have unsheathed a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (see the details here).

Equally as key, positive insider trading activity is another way to break down the stock market universe. Obviously, there are a number of stimuli for a bullish insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know what to do (learn more here).

Keeping this in mind, let’s take a gander at the latest action encompassing Big 5 Sporting Goods Corporation (NASDAQ:BGFV).

Hedge fund activity in Big 5 Sporting Goods Corporation (NASDAQ:BGFV)

At the end of the fourth quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 38% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Stadium Capital Management, managed by Alexander Medina Seaver, holds the biggest position in Big 5 Sporting Goods Corporation (NASDAQ:BGFV). Stadium Capital Management has a $44.2 million position in the stock, comprising 10.5% of its 13F portfolio. Sitting at the No. 2 spot is MFP Investors, managed by Michael Price, which held a $4.6 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Mario Gabelli’s GAMCO Investors, Joel Greenblatt’s Gotham Asset Management and Ken Griffin’s Citadel Investment Group.

Now, key hedge funds were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, created the most valuable position in Big 5 Sporting Goods Corporation (NASDAQ:BGFV). Gotham Asset Management had 1.6 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $0.9 million position during the quarter. The following funds were also among the new BGFV investors: Jim Simons’s Renaissance Technologies and Steven Cohen’s SAC Capital Advisors.

Insider trading activity in Big 5 Sporting Goods Corporation (NASDAQ:BGFV)

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past six months. Over the latest six-month time frame, Big 5 Sporting Goods Corporation (NASDAQ:BGFV) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Big 5 Sporting Goods Corporation (NASDAQ:BGFV). These stocks are Dover Saddlery, Inc. (NASDAQ:DOVR), Dicks Sporting Goods Inc (NYSE:DKS), Cabelas Inc (NYSE:CAB), and Hibbett Sports, Inc. (NASDAQ:HIBB). All of these stocks are in the sporting goods stores industry and their market caps are similar to BGFV’s market cap.