Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
One stock that saw an increase in popularity among smart money investors in our database last quarter is Deckers Outdoor Corp (NASDAQ:DECK). A total of 17 funds held shares of the company at the end of September. At the end of this article we will also compare DECK to other stocks including Fortress Investment Group LLC (NYSE:FIG), Qunar Cayman Islands Ltd (NASDAQ:QUNR), and Abengoa Yield PLC (NASDAQ:ABY) to get a better sense of its popularity.
Follow Deckers Outdoor Corp (NYSE:DECK)
Follow Deckers Outdoor Corp (NYSE:DECK)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s go over the key action regarding Deckers Outdoor Corp (NASDAQ:DECK).
Hedge fund activity in Deckers Outdoor Corp (NASDAQ:DECK)
At the end of September, 17 of the hedge funds tracked by Insider Monkey were long this stock, up by two funds from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in DECK at the beginning of 2016. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Richard Mashaal’s Rima Senvest Management has the largest position in Deckers Outdoor Corp (NASDAQ:DECK), worth close to $83.6 million, amounting to 6% of its total 13F portfolio. The second most bullish fund is Willem Mesdag’s Red Mountain Capital holding a $62.8 million position; the fund has 19% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Chuck Royce’s Royce & Associates, Cliff Asness’ AQR Capital Management, and Steven Boyd’s Armistice Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, some big names have jumped into Deckers Outdoor Corp (NASDAQ:DECK) headfirst. John Tompkins’ Tyvor Capital initiated the largest position in Deckers Outdoor Corp (NASDAQ:DECK). Tyvor Capital had $7.1 million invested in the company at the end of the quarter. David Keidan’s Buckingham Capital Management also initiated a $4.2 million position during the quarter. The following funds were also among the new DECK investors: Ken Griffin’s Citadel Investment Group, Leon Shaulov’s Maplelane Capital, and Noam Gottesman’s GLG Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Deckers Outdoor Corp (NASDAQ:DECK) but similarly valued. We will take a look at Fortress Investment Group LLC (NYSE:FIG), Qunar Cayman Islands Ltd (NASDAQ:QUNR), Abengoa Yield PLC (NASDAQ:ABY), and Grand Canyon Education Inc (NASDAQ:LOPE). This group of stocks’ market valuations are similar to DECK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FIG | 21 | 100036 | -2 |
| QUNR | 7 | 10274 | 0 |
| ABY | 13 | 385412 | 1 |
| LOPE | 19 | 133360 | 0 |
As you can see these stocks had an average of 15 funds with bullish positions and the average amount invested in these stocks was $157 million, versus $241 million in DECK’s case. Fortress Investment Group LLC (NYSE:FIG) is the most popular stock in this table. On the other hand Qunar Cayman Islands Ltd (NASDAQ:QUNR) is the least popular one with only seven funds holding shares. Deckers Outdoor Corp (NASDAQ:DECK) 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. In this regard Fortress Investment Group LLC (NYSE:FIG) might be a better candidate to consider taking a long position in.
Disclosure: None
