Hedge Funds Are Coming Back To Sportsman’s Warehouse Holdings Inc (SPWH)

In this article we will check out the progression of hedge fund sentiment towards Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) ready to rally soon? Money managers were in an optimistic mood. The number of bullish hedge fund positions rose by 2 lately. Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 33. Our calculations also showed that SPWH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 18 hedge funds in our database with SPWH positions at the end of the first quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Matthew Halbower of Pentwater 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. Now let’s take a glance at the recent hedge fund action encompassing Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH).

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

At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the first quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in SPWH 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.

The largest stake in Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) was held by Magnetar Capital, which reported holding $51.2 million worth of stock at the end of June. It was followed by Alpine Associates with a $40.4 million position. Other investors bullish on the company included Pentwater Capital Management, Balyasny Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Alpine Associates allocated the biggest weight to Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH), around 1.11% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, earmarking 0.99 percent of its 13F equity portfolio to SPWH.

As aggregate interest increased, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH). Balyasny Asset Management had $14.6 million invested in the company at the end of the quarter. David Alexander Witkin’s Beryl Capital Management also initiated a $9.1 million position during the quarter. The other funds with brand new SPWH positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Lee Ainslie’s Maverick Capital, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) but similarly valued. We will take a look at Aligos Therapeutics, Inc. (NASDAQ:ALGS), Allegiance Bancshares, Inc. (NASDAQ:ABTX), MRC Global Inc (NYSE:MRC), CM Life Sciences, Inc. (NASDAQ:CMLF), Karyopharm Therapeutics Inc (NASDAQ:KPTI), Univest Financial Corporation (NASDAQ:UVSP), and Geopark Ltd (NYSE:GPRK). All of these stocks’ market caps match SPWH’s market cap.

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As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $196 million in SPWH’s case. CM Life Sciences, Inc. (NASDAQ:CMLF) is the most popular stock in this table. On the other hand Aligos Therapeutics, Inc. (NASDAQ:ALGS) is the least popular one with only 8 bullish hedge fund positions. Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPWH is 60.5. 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. 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% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately SPWH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SPWH were disappointed as the stock returned -0.6% since the end of June (through 10/22) 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.

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