Hedge Funds Are Selling Vista Outdoor Inc (VSTO)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Vista Outdoor Inc (NYSE:VSTO).

Vista Outdoor Inc (NYSE:VSTO) shareholders have witnessed a decrease in hedge fund sentiment of late. Vista Outdoor Inc (NYSE:VSTO) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. There were 23 hedge funds in our database with VSTO positions at the end of the fourth quarter. Our calculations also showed that VSTO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are plenty of gauges investors put to use to evaluate their stock investments. Some of the most underrated gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outclass the S&P 500 by a significant amount (see the details here). 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 .

Jeffrey Gates of Gates Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Keeping this in mind we’re going to review the recent hedge fund action encompassing Vista Outdoor Inc (NYSE:VSTO).

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

At first quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in VSTO 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, Gates Capital Management was the largest shareholder of Vista Outdoor Inc (NYSE:VSTO), with a stake worth $182.4 million reported as of the end of March. Trailing Gates Capital Management was Greenhouse Funds, which amassed a stake valued at $34.9 million. Driehaus Capital, Arrowstreet Capital, and Marshall Wace LLP 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 Gates Capital Management allocated the biggest weight to Vista Outdoor Inc (NYSE:VSTO), around 6.64% of its 13F portfolio. Mountain Lake Investment Management is also relatively very bullish on the stock, dishing out 6.51 percent of its 13F equity portfolio to VSTO.

Due to the fact that Vista Outdoor Inc (NYSE:VSTO) has faced declining sentiment from hedge fund managers, logic holds that there were a few hedgies who were dropping their full holdings heading into Q2. Intriguingly, Israel Englander’s Millennium Management dumped the largest investment of all the hedgies tracked by Insider Monkey, valued at an estimated $19.3 million in stock. Jeremy Hosking’s fund, Hosking Partners, also dropped its stock, about $10.9 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into Q2.

Let’s now review hedge fund activity in other stocks similar to Vista Outdoor Inc (NYSE:VSTO). These stocks are Washington Real Estate Investment Trust (NYSE:WRE), Myovant Sciences Ltd. (NYSE:MYOV), JinkoSolar Holding Co., Ltd. (NYSE:JKS), Alamo Group, Inc. (NYSE:ALG), Hope Bancorp, Inc. (NASDAQ:HOPE), Banner Corporation (NASDAQ:BANR), and Domtar Corporation (NYSE:UFS). All of these stocks’ market caps are closest to VSTO’s market cap.

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As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $345 million in VSTO’s case. Domtar Corporation (NYSE:UFS) is the most popular stock in this table. On the other hand Washington Real Estate Investment Trust (NYSE:WRE) is the least popular one with only 10 bullish hedge fund positions. Vista Outdoor Inc (NYSE:VSTO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VSTO is 62.9. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on VSTO as the stock returned 22.2% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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