Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 15 S&P 500 stocks among hedge funds at the end of December 2018 yielded an average return of 19.7% year-to-date, vs. a gain of 13.1% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Barnes & Noble, Inc. (NYSE:BKS).
Is Barnes & Noble, Inc. (NYSE:BKS) a healthy stock for your portfolio? Hedge funds are betting on the stock. The number of bullish hedge fund positions moved up by 1 recently. Our calculations also showed that BKS isn’t among the 30 most popular stocks among hedge funds.
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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the new hedge fund action regarding Barnes & Noble, Inc. (NYSE:BKS).
What have hedge funds been doing with Barnes & Noble, Inc. (NYSE:BKS)?
At Q4’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in BKS 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.
The largest stake in Barnes & Noble, Inc. (NYSE:BKS) was held by Antara Capital, which reported holding $8.1 million worth of stock at the end of December. It was followed by Maverick Capital with a $7.5 million position. Other investors bullish on the company included Citadel Investment Group, Highland Capital Management, and Millennium Management.
Now, some big names were breaking ground themselves. Antara Capital, managed by Himanshu Gulati, assembled the most valuable call position in Barnes & Noble, Inc. (NYSE:BKS). Antara Capital had $8.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $3.6 million investment in the stock during the quarter. The following funds were also among the new BKS investors: Mark Broach’s Manatuck Hill Partners, Himanshu Gulati’s Antara Capital, and Claes Fornell’s CSat Investment Advisory.
Let’s now review hedge fund activity in other stocks similar to Barnes & Noble, Inc. (NYSE:BKS). We will take a look at Calix Inc (NYSE:CALX), Veritex Holdings Inc (NASDAQ:VBTX), HarborOne Bancorp, Inc. (NASDAQ:HONE), and Shoe Carnival, Inc. (NASDAQ:SCVL). This group of stocks’ market valuations match BKS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CALX | 14 | 119940 | 2 |
| VBTX | 8 | 51816 | -9 |
| HONE | 4 | 6758 | -2 |
| SCVL | 19 | 71747 | 4 |
| Average | 11.25 | 62565 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $34 million in BKS’s case. Shoe Carnival, Inc. (NASDAQ:SCVL) is the most popular stock in this table. On the other hand HarborOne Bancorp, Inc. (NASDAQ:HONE) is the least popular one with only 4 bullish hedge fund positions. Barnes & Noble, Inc. (NYSE:BKS) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately BKS wasn’t nearly as popular as these 15 stock and hedge funds that were betting on BKS were disappointed as the stock returned -32.5% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
