In this article you are going to find out whether hedge funds think Burlington Stores Inc (NYSE:BURL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is BURL a good stock to buy? The smart money was selling. The number of bullish hedge fund bets were trimmed by 8 recently. Burlington Stores Inc (NYSE:BURL) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic is 40. Our calculations also showed that BURL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dan Loeb of Third Point
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. Keeping this in mind we’re going to take a peek at the key hedge fund action encompassing Burlington Stores Inc (NYSE:BURL).
Do Hedge Funds Think BURL Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the second quarter of 2020. By comparison, 39 hedge funds held shares or bullish call options in BURL a year ago. So, let’s review 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, Phill Gross and Robert Atchinson’s Adage Capital Management has the most valuable position in Burlington Stores Inc (NYSE:BURL), worth close to $490.1 million, corresponding to 1.2% of its total 13F portfolio. On Adage Capital Management’s heels is Third Point, managed by Dan Loeb, which holds a $344.2 million position; the fund has 3.4% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Ryan Frick and Oliver Evans’s Dorsal Capital Management, Gabriel Plotkin’s Melvin Capital Management and Robert Pohly’s Samlyn Capital. In terms of the portfolio weights assigned to each position Dorsal Capital Management allocated the biggest weight to Burlington Stores Inc (NYSE:BURL), around 7.39% of its 13F portfolio. Third Point is also relatively very bullish on the stock, dishing out 3.44 percent of its 13F equity portfolio to BURL.
Judging by the fact that Burlington Stores Inc (NYSE:BURL) has faced falling interest from the smart money, we can see that there is a sect of fund managers that decided to sell off their full holdings in the third quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling about $59.1 million in stock. Steven Boyd’s fund, Armistice Capital, also said goodbye to its stock, about $28.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 8 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Burlington Stores Inc (NYSE:BURL). These stocks are MongoDB, Inc. (NASDAQ:MDB), Nucor Corporation (NYSE:NUE), Zebra Technologies Corporation (NASDAQ:ZBRA), Kirkland Lake Gold Ltd. (NYSE:KL), Markel Corporation (NYSE:MKL), Pool Corporation (NASDAQ:POOL), and Carnival Corporation & Plc (NYSE:CCL). All of these stocks’ market caps are similar to BURL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDB | 42 | 1356747 | 5 |
| NUE | 28 | 110512 | 2 |
| ZBRA | 44 | 817708 | 6 |
| KL | 22 | 513630 | -1 |
| MKL | 34 | 1014655 | 1 |
| POOL | 36 | 916971 | 1 |
| CCL | 37 | 285153 | 6 |
| Average | 34.7 | 716482 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.7 hedge funds with bullish positions and the average amount invested in these stocks was $716 million. That figure was $1220 million in BURL’s case. Zebra Technologies Corporation (NASDAQ:ZBRA) is the most popular stock in this table. On the other hand Kirkland Lake Gold Ltd. (NYSE:KL) is the least popular one with only 22 bullish hedge fund positions. Burlington Stores Inc (NYSE:BURL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BURL is 37.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on BURL as the stock returned 16.9% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
Follow Burlington Stores Inc. (NYSE:BURL)
Follow Burlington Stores Inc. (NYSE:BURL)
Disclosure: None. This article was originally published at Insider Monkey.
