We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Vista Outdoor Inc (NYSE:VSTO).
Vista Outdoor Inc (NYSE:VSTO) shareholders have witnessed an increase in support from the world’s most elite money managers recently. Our calculations also showed that vsto isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a glance at the recent hedge fund action regarding Vista Outdoor Inc (NYSE:VSTO).
How have hedgies been trading Vista Outdoor Inc (NYSE:VSTO)?
Heading into the fourth quarter of 2018, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VSTO over the last 13 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Bruce Berkowitz’s Fairholme (FAIRX) has the most valuable position in Vista Outdoor Inc (NYSE:VSTO), worth close to $63.2 million, comprising 10.5% of its total 13F portfolio. On Fairholme (FAIRX)’s heels is D E Shaw, led by D. E. Shaw, holding a $15.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Mitch Cantor’s Mountain Lake Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Paul J. Isaac’s Arbiter Partners Capital Management.
As one would reasonably expect, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in Vista Outdoor Inc (NYSE:VSTO). Citadel Investment Group had $0.9 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also made a $0.3 million investment in the stock during the quarter. The other funds with brand new VSTO positions are Guy Shahar’s DSAM Partners, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Mike Vranos’s Ellington.
Let’s go over hedge fund activity in other stocks similar to Vista Outdoor Inc (NYSE:VSTO). These stocks are ClearBridge Energy MLP Fund Inc. (NYSE:CEM), Duluth Holdings Inc. (NASDAQ:DLTH), FormFactor, Inc. (NASDAQ:FORM), and Hyster-Yale Materials Handling Inc (NYSE:HY). All of these stocks’ market caps are closest to VSTO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CEM | 1 | 3892 | 0 |
| DLTH | 10 | 13101 | 3 |
| FORM | 10 | 44094 | -2 |
| HY | 10 | 43925 | -4 |
| Average | 7.75 | 26253 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $127 million in VSTO’s case. Duluth Holdings Inc. (NASDAQ:DLTH) is the most popular stock in this table. On the other hand ClearBridge Energy MLP Fund Inc. (NYSE:CEM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Vista Outdoor Inc (NYSE:VSTO) 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.
Disclosure: None. This article was originally published at Insider Monkey.
