As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Columbia Sportswear Company (NASDAQ:COLM).
Columbia Sportswear Company (NASDAQ:COLM) was in 29 hedge funds’ portfolios at the end of June. The all time high for this statistic is 32. COLM shareholders have witnessed an increase in hedge fund sentiment recently. There were 21 hedge funds in our database with COLM positions at the end of the first quarter. Our calculations also showed that COLM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
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 we’re going to analyze the latest hedge fund action surrounding Columbia Sportswear Company (NASDAQ:COLM).
Do Hedge Funds Think COLM Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in COLM a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Columbia Sportswear Company (NASDAQ:COLM), with a stake worth $83.8 million reported as of the end of June. Trailing Arrowstreet Capital was AQR Capital Management, which amassed a stake valued at $56.3 million. GLG Partners, Two Sigma Advisors, and Millennium 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 Running Oak Capital allocated the biggest weight to Columbia Sportswear Company (NASDAQ:COLM), around 3.03% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, earmarking 0.36 percent of its 13F equity portfolio to COLM.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Hudson Bay Capital Management, managed by Sander Gerber, initiated the most valuable position in Columbia Sportswear Company (NASDAQ:COLM). Hudson Bay Capital Management had $3.9 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $3.4 million position during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Alec Litowitz and Ross Laser’s Magnetar Capital, and Ran Pang’s Quantamental Technologies.
Let’s now review hedge fund activity in other stocks similar to Columbia Sportswear Company (NASDAQ:COLM). These stocks are KT Corporation (NYSE:KT), Fox Factory Holding Corp (NASDAQ:FOXF), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), Synovus Financial Corp. (NYSE:SNV), Hanesbrands Inc. (NYSE:HBI), Planet Fitness Inc (NYSE:PLNT), and Twist Bioscience Corporation (NASDAQ:TWST). This group of stocks’ market valuations resemble COLM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KT | 14 | 181363 | 2 |
| FOXF | 14 | 99033 | 0 |
| BJ | 17 | 103834 | 3 |
| SNV | 30 | 232034 | 0 |
| HBI | 33 | 970597 | 1 |
| PLNT | 34 | 1174885 | -6 |
| TWST | 23 | 1156581 | -1 |
| Average | 23.6 | 559761 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $560 million. That figure was $244 million in COLM’s case. Planet Fitness Inc (NYSE:PLNT) is the most popular stock in this table. On the other hand KT Corporation (NYSE:KT) is the least popular one with only 14 bullish hedge fund positions. Columbia Sportswear Company (NASDAQ:COLM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COLM is 74.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately COLM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on COLM were disappointed as the stock returned -1.9% since the end of June (through 10/15) 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 many of these stocks already outperformed the market since 2019.
Follow Columbia Sportswear Co (NASDAQ:COLM)
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Disclosure: None. This article was originally published at Insider Monkey.
