Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.
Is Dicks Sporting Goods Inc (NYSE:DKS) the right pick for your portfolio? Prominent investors are taking a pessimistic view. The number of long hedge fund positions dropped by 6 recently. DKS was in 26 hedge funds’ portfolios at the end of September. There were 32 hedge funds in our database with DKS holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Packaging Corp Of America (NYSE:PKG), Rollins, Inc. (NYSE:ROL), and Antero Resources Corp (NYSE:AR) to gather more data points.
Follow Dick's Sporting Goods Inc. (NYSE:DKS)
Follow Dick's Sporting Goods Inc. (NYSE:DKS)
With all of this in mind, let’s take a glance at the key action regarding Dicks Sporting Goods Inc (NYSE:DKS).
What does the smart money think about Dicks Sporting Goods Inc (NYSE:DKS)?
Heading into Q4, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Dicks Sporting Goods Inc (NYSE:DKS). AQR Capital Management has a $75.9 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Balyasny Asset Management, led by Dmitry Balyasny, holding a $43.4 million position; 0.3% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise D E Shaw, Glenn J. Krevlin’s Glenhill Advisors and Israel Englander’s Millennium Management.
Judging by the fact that Dicks Sporting Goods Inc (NYSE:DKS) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds that elected to cut their entire stakes heading into Q4. Intriguingly, Gabriel Plotkin’s Melvin Capital Management cut the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth close to $32.4 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund sold off about $31.9 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 6 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Dicks Sporting Goods Inc (NYSE:DKS) but similarly valued. These stocks are Packaging Corp Of America (NYSE:PKG), Rollins, Inc. (NYSE:ROL), Antero Resources Corp (NYSE:AR), and Markit Ltd (NASDAQ:MRKT). This group of stocks’ market valuations match DKS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PKG | 19 | 185553 | -12 |
| ROL | 22 | 347022 | 9 |
| AR | 24 | 881365 | -2 |
| MRKT | 16 | 183938 | -5 |
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $399 million. That figure was $340 million in DKS’s case. Antero Resources Corp (NYSE:AR) is the most popular stock in this table. On the other hand Markit Ltd (NASDAQ:MRKT) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Dicks Sporting Goods Inc (NYSE:DKS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
