Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Burlington Stores Inc (NYSE:BURL).
Burlington Stores Inc (NYSE:BURL) investors should be aware of an increase in support from the world’s most elite money managers recently. Burlington Stores Inc (NYSE:BURL) was in 32 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that BURL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
According to most traders, hedge funds are seen as slow, outdated investment tools of years past. While there are greater than 8000 funds trading today, Our experts choose to focus on the upper echelon of this club, about 850 funds. These hedge fund managers oversee the majority of the hedge fund industry’s total asset base, and by paying attention to their highest performing equity investments, Insider Monkey has discovered many investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Ryan Frick of Dorsal Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s go over the latest hedge fund action regarding Burlington Stores Inc (NYSE:BURL).
Do Hedge Funds Think BURL Is A Good Stock To Buy Now?
At the end of March, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BURL over the last 23 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Third Point held the most valuable stake in Burlington Stores Inc (NYSE:BURL), which was worth $448.2 million at the end of the fourth quarter. On the second spot was Adage Capital Management which amassed $356 million worth of shares. Alkeon Capital Management, Scopus Asset Management, and Dorsal Capital Management 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 MIK Capital allocated the biggest weight to Burlington Stores Inc (NYSE:BURL), around 3.99% of its 13F portfolio. Third Point is also relatively very bullish on the stock, designating 3.02 percent of its 13F equity portfolio to BURL.
Now, key hedge funds were breaking ground themselves. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, initiated the biggest position in Burlington Stores Inc (NYSE:BURL). Alkeon Capital Management had $255.2 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $127 million position during the quarter. The other funds with new positions in the stock are Parvinder Thiara’s Athanor Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Alexander Mitchell’s Scopus Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Burlington Stores Inc (NYSE:BURL) but similarly valued. These stocks are Dover Corporation (NYSE:DOV), 10x Genomics, Inc. (NASDAQ:TXG), Discovery Inc. (NASDAQ:DISCA), Trimble Inc. (NASDAQ:TRMB), M&T Bank Corporation (NYSE:MTB), Teleflex Incorporated (NYSE:TFX), and KB Financial Group, Inc. (NYSE:KB). This group of stocks’ market values match BURL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOV | 26 | 639746 | -6 |
| TXG | 23 | 1217339 | -10 |
| DISCA | 48 | 590723 | 20 |
| TRMB | 23 | 1515928 | 2 |
| MTB | 36 | 671109 | 3 |
| TFX | 33 | 571638 | 3 |
| KB | 9 | 43761 | 4 |
| Average | 28.3 | 750035 | 2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $750 million. That figure was $1441 million in BURL’s case. Discovery Inc. (NASDAQ:DISCA) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 9 bullish hedge fund positions. Burlington Stores Inc (NYSE:BURL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BURL is 61.5. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on BURL, though not to the same extent, as the stock returned 11.1% since Q1 (through July 2nd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
