Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 8 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Burlington Stores Inc (NYSE:BURL).
Burlington Stores Inc (NYSE:BURL) has seen an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that BURL isn’t among the 30 most popular stocks among hedge funds.
Today there are a multitude of tools investors put to use to evaluate stocks. A pair of the most underrated tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the best money managers can outperform the broader indices by a significant margin (see the details here).
Let’s take a look at the key hedge fund action regarding Burlington Stores Inc (NYSE:BURL).
How have hedgies been trading Burlington Stores Inc (NYSE:BURL)?
At Q1’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the fourth quarter of 2018. By comparison, 33 hedge funds held shares or bullish call options in BURL 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.
Among these funds, Adage Capital Management held the most valuable stake in Burlington Stores Inc (NYSE:BURL), which was worth $280.9 million at the end of the first quarter. On the second spot was Samlyn Capital which amassed $157.6 million worth of shares. Moreover, Steadfast Capital Management, Maverick Capital, and Millennium Management were also bullish on Burlington Stores Inc (NYSE:BURL), allocating a large percentage of their portfolios to this stock.
Now, key hedge funds have jumped into Burlington Stores Inc (NYSE:BURL) headfirst. Steadfast Capital Management, managed by Robert Pitts, assembled the most outsized position in Burlington Stores Inc (NYSE:BURL). Steadfast Capital Management had $107.3 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also made a $59.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Andreas Halvorsen’s Viking Global, Brandon Haley’s Holocene Advisors, and James Parsons’s Junto Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Burlington Stores Inc (NYSE:BURL) but similarly valued. We will take a look at Jacobs Engineering Group Inc (NYSE:JEC), The Ultimate Software Group, Inc. (NASDAQ:ULTI), Enel Americas S.A. (NYSE:ENIA), and W.R. Berkley Corporation (NYSE:WRB). This group of stocks’ market valuations resemble BURL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JEC | 33 | 1008926 | 0 |
| ULTI | 35 | 1420211 | 15 |
| ENIA | 14 | 151897 | 3 |
| WRB | 18 | 253246 | -5 |
| Average | 25 | 708570 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $709 million. That figure was $1352 million in BURL’s case. The Ultimate Software Group, Inc. (NASDAQ:ULTI) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 14 bullish hedge fund positions. Burlington Stores Inc (NYSE:BURL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on BURL, though not to the same extent, as the stock returned -0.4% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
