Is The Buckle, Inc. (BKE) Going to Burn These Hedge Funds?

Is The Buckle, Inc. (NYSE:BKE) going to take off soon? Money managers are in a pessimistic mood. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience

If you’d ask most investors, hedge funds are perceived as underperforming, old investment tools of the past. While there are over 8000 funds trading at present, we at Insider Monkey choose to focus on the top tier of this group, about 450 funds. It is widely believed that this group has its hands on the lion’s share of the smart money’s total asset base, and by tracking their top stock picks, we have come up with a few investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as integral, optimistic insider trading activity is a second way to break down the stock market universe. Just as you’d expect, there are a number of reasons for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this strategy if shareholders know where to look (learn more here).

Now, we’re going to take a gander at the key action regarding The Buckle, Inc. (NYSE:BKE).

Hedge fund activity in The Buckle, Inc. (NYSE:BKE)

At the end of the first quarter, a total of 8 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in The Buckle, Inc. (NYSE:BKE), worth close to $349.8 million, comprising 1.1% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $23.5 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Joel Greenblatt’s Gotham Asset Management, Cliff Asness’s AQR Capital Management and Neil Chriss’s Hutchin Hill Capital.

Seeing as The Buckle, Inc. (NYSE:BKE) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that elected to cut their entire stakes in Q1. Interestingly, Matthew Hulsizer’s PEAK6 Capital Management dropped the biggest position of the “upper crust” of funds we watch, worth close to $1.2 million in call options, and Mike Vranos of Ellington was right behind this move, as the fund said goodbye to about $0.5 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in The Buckle, Inc. (NYSE:BKE)

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time frame, The Buckle, Inc. (NYSE:BKE) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to The Buckle, Inc. (NYSE:BKE). These stocks are The Men’s Wearhouse, Inc. (NYSE:MW), Ascena Retail Group Inc (NASDAQ:ASNA), DSW Inc. (NYSE:DSW), Chico’s FAS, Inc. (NYSE:CHS), and Guess?, Inc. (NYSE:GES). All of these stocks are in the apparel stores industry and their market caps match BKE’s market cap.