Is VSTO Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Vista Outdoor Inc (NYSE:VSTO).

Is VSTO stock a buy? Vista Outdoor Inc (NYSE:VSTO) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Vista Outdoor Inc (NYSE:VSTO) was in 23 hedge funds’ portfolios at the end of December. The all time high for this statistic is 28. There were 28 hedge funds in our database with VSTO holdings at the end of September. Our calculations also showed that VSTO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jeffrey Gates of Gates Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a glance at the key hedge fund action regarding Vista Outdoor Inc (NYSE:VSTO).

Do Hedge Funds Think VSTO Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in VSTO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Gates Capital Management held the most valuable stake in Vista Outdoor Inc (NYSE:VSTO), which was worth $132.4 million at the end of the fourth quarter. On the second spot was Greenhouse Funds which amassed $45.1 million worth of shares. Arrowstreet Capital, Renaissance Technologies, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mountain Lake Investment Management allocated the biggest weight to Vista Outdoor Inc (NYSE:VSTO), around 7.24% of its 13F portfolio. Greenhouse Funds is also relatively very bullish on the stock, earmarking 4.2 percent of its 13F equity portfolio to VSTO.

Because Vista Outdoor Inc (NYSE:VSTO) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds who sold off their positions entirely by the end of the fourth quarter. Intriguingly, Andrew Kurita’s Kettle Hill Capital Management dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $4.7 million in stock, and Sander Gerber’s Hudson Bay Capital Management was right behind this move, as the fund said goodbye to about $3.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds by the end of the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vista Outdoor Inc (NYSE:VSTO) but similarly valued. We will take a look at Black Stone Minerals LP (NYSE:BSM), Blink Charging Co. (NASDAQ:BLNK), Sandstorm Gold Ltd. (NYSE:SAND), Lakeland Financial Corporation (NASDAQ:LKFN), Heska Corp (NASDAQ:HSKA), Evolent Health Inc (NYSE:EVH), and PAR Technology Corporation (NYSE:PAR). This group of stocks’ market caps are similar to VSTO’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $312 million in VSTO’s case. PAR Technology Corporation (NYSE:PAR) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Vista Outdoor Inc (NYSE:VSTO) is more popular among hedge funds. Our overall hedge fund sentiment score for VSTO is 74.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on VSTO as the stock returned 40.6% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.