Hedge Funds Are Buying Academy Sports and Outdoors, Inc. (ASO)

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Academy Sports and Outdoors, Inc. (NASDAQ:ASO).

Academy Sports and Outdoors, Inc. (NASDAQ:ASO) has seen an increase in hedge fund interest recently. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) was in 37 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ASO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

According to most stock holders, hedge funds are assumed to be underperforming, outdated financial vehicles of the past. While there are greater than 8000 funds trading at the moment, Our researchers choose to focus on the aristocrats of this club, about 850 funds. It is estimated that this group of investors preside over the majority of all hedge funds’ total asset base, and by paying attention to their highest performing investments, Insider Monkey has formulated numerous investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually 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 .

Robert Pohly of Samlyn 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 battery 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. Now let’s take a peek at the new hedge fund action regarding Academy Sports and Outdoors, Inc. (NASDAQ:ASO).

Do Hedge Funds Think ASO Is A Good Stock To Buy Now?

At Q1’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in ASO a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Samlyn Capital held the most valuable stake in Academy Sports and Outdoors, Inc. (NASDAQ:ASO), which was worth $77.5 million at the end of the fourth quarter. On the second spot was Scopus Asset Management which amassed $62.8 million worth of shares. Tiger Global Management LLC, Citadel Investment Group, 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 Stormborn Capital Management allocated the biggest weight to Academy Sports and Outdoors, Inc. (NASDAQ:ASO), around 2.78% of its 13F portfolio. Six Columns Capital is also relatively very bullish on the stock, dishing out 2.4 percent of its 13F equity portfolio to ASO.

As aggregate interest increased, some big names have jumped into Academy Sports and Outdoors, Inc. (NASDAQ:ASO) headfirst. Park West Asset Management, managed by Peter S. Park, established the biggest position in Academy Sports and Outdoors, Inc. (NASDAQ:ASO). Park West Asset Management had $18.9 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also made a $14.8 million investment in the stock during the quarter. The following funds were also among the new ASO investors: Lee Ainslie’s Maverick Capital, Alexander Mitchell’s Scopus Asset Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now review hedge fund activity in other stocks similar to Academy Sports and Outdoors, Inc. (NASDAQ:ASO). We will take a look at Telos Corporation (NASDAQ:TLS), Green Dot Corporation (NYSE:GDOT), Aeva Technologies, Inc. (NYSE:AEVA), Trinseo S.A. (NYSE:TSE), IGM Biosciences, Inc. (NASDAQ:IGMS), Forward Air Corporation (NASDAQ:FWRD), and Golub Capital BDC Inc (NASDAQ:GBDC). This group of stocks’ market valuations resemble ASO’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $313 million. That figure was $410 million in ASO’s case. Green Dot Corporation (NYSE:GDOT) is the most popular stock in this table. On the other hand Forward Air Corporation (NASDAQ:FWRD) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is more popular among hedge funds. Our overall hedge fund sentiment score for ASO is 90. 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 returned 19.3% in 2021 through June 25th but still managed to beat the market by 4.8 percentage points. Hedge funds were also right about betting on ASO as the stock returned 57.1% since the end of March (through 6/25) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.