Hedge Funds Are Buying The Buckle, Inc. (BKE)

Is The Buckle, Inc. (NYSE:BKE) a buy here? Money managers are in a bullish mood. The number of long hedge fund positions rose by 2 recently.

According to most market participants, hedge funds are perceived as underperforming, outdated financial tools of yesteryear. While there are greater than 8000 funds in operation today, we look at the top tier of this club, around 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total capital, and by keeping an eye on their best picks, we have deciphered a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as beneficial, positive insider trading sentiment is a second way to parse down the world of equities. Obviously, there are a number of incentives for an insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Many academic studies have demonstrated the valuable potential of this strategy if piggybackers understand what to do (learn more here).

Now, it’s important to take a peek at the recent action encompassing The Buckle, Inc. (NYSE:BKE).

What does the smart money think about The Buckle, Inc. (NYSE:BKE)?

At year’s end, a total of 7 of the hedge funds we track were long in this stock, a change of 40% from the third quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in The Buckle, Inc. (NYSE:BKE). Royce & Associates has a $322.4 million position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by Gotham Asset Management, managed by Joel Greenblatt, which held a $8.1 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include Cliff Asness’s AQR Capital Management, and Israel Englander’s Millennium Management.

As aggregate interest increased, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the largest position in The Buckle, Inc. (NYSE:BKE). Millennium Management had 0.8 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $0.5 million position during the quarter. The only other fund with a new position in the stock is Mike Vranos’s Ellington.

What do corporate executives and insiders think about The Buckle, Inc. (NYSE:BKE)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, The Buckle, Inc. (NYSE:BKE) has seen zero unique insiders buying, and 4 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 The Buckle, Inc. (NYSE:BKE). These stocks are The Men’s Wearhouse, Inc. (NYSE:MW), Ascena Retail Group Inc (NASDAQ:ASNA), DSW Inc. (NYSE:DSW), Chico’s FAS, Inc. (NYSE:CHS), and Guess?, Inc. (NYSE:GES). This group of stocks are in the apparel stores industry and their market caps are closest to BKE’s market cap.

With the returns shown by our tactics, retail investors should always keep an eye on hedge fund and insider trading sentiment, and The Buckle, Inc. (NYSE:BKE) applies perfectly to this mantra.

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