Is ASO Stock A Buy or Sell?

In this article we will analyze whether Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is ASO stock a buy? The smart money was in an optimistic mood. The number of bullish hedge fund positions rose by 26 lately. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) was in 26 hedge funds’ portfolios at the end of December. Our calculations also showed that ASO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Clint Carlson of Carlson Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to take a look at the recent hedge fund action surrounding Academy Sports and Outdoors, Inc. (NASDAQ:ASO).

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

At the end of December, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ASO over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Samlyn Capital, managed by Robert Pohly, holds the biggest position in Academy Sports and Outdoors, Inc. (NASDAQ:ASO). Samlyn Capital has a $44.4 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Chase Coleman of Tiger Global Management LLC, with a $36.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism comprise Alexander Mitchell’s Scopus Asset Management, Israel Englander’s Millennium Management and Clint Carlson’s Carlson Capital. 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 4.38% of its 13F portfolio. MIK Capital is also relatively very bullish on the stock, dishing out 2.27 percent of its 13F equity portfolio to ASO.

As aggregate interest increased, key money managers have been driving this bullishness. Samlyn Capital, managed by Robert Pohly, created the largest position in Academy Sports and Outdoors, Inc. (NASDAQ:ASO). Samlyn Capital had $44.4 million invested in the company at the end of the quarter. Chase Coleman’s Tiger Global Management LLC also initiated a $36.3 million position during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Israel Englander’s Millennium Management, and Clint Carlson’s Carlson Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Academy Sports and Outdoors, Inc. (NASDAQ:ASO) but similarly valued. These stocks are Genmab A/S (NASDAQ:GMAB), Murphy Oil Corporation (NYSE:MUR), Fitbit Inc (NYSE:FIT), Addus Homecare Corporation (NASDAQ:ADUS), Health Catalyst, Inc (NASDAQ:HCAT), YPF Sociedad Anonima (NYSE:YPF), and Viper Energy Partners LP (NASDAQ:VNOM). This group of stocks’ market valuations match ASO’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $236 million in ASO’s case. Fitbit Inc (NYSE:FIT) is the most popular stock in this table. On the other hand YPF Sociedad Anonima (NYSE:YPF) is the least popular one with only 6 bullish hedge fund positions. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ASO is 71.5. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on ASO as the stock returned 54% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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