Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Boot Barn Holdings Inc (NYSE:BOOT) from the perspective of those elite funds.
Boot Barn Holdings Inc (NYSE:BOOT) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that BOOT 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 view the recent hedge fund action regarding Boot Barn Holdings Inc (NYSE:BOOT).
Hedge fund activity in Boot Barn Holdings Inc (NYSE:BOOT)
Heading into the fourth quarter of 2018, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in BOOT at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Point72 Asset Management, managed by Steve Cohen, holds the most valuable position in Boot Barn Holdings Inc (NYSE:BOOT). Point72 Asset Management has a $25.3 million position in the stock, comprising 0.1% of its 13F portfolio. On Point72 Asset Management’s heels is Millennium Management, managed by Israel Englander, which holds a $24.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish contain Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, Richard Driehaus’s Driehaus Capital and Principal Global Investors’s Columbus Circle Investors.
As aggregate interest increased, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, established the most outsized position in Boot Barn Holdings Inc (NYSE:BOOT). Point72 Asset Management had $25.3 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $8.4 million position during the quarter. The other funds with brand new BOOT positions are Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group, and Peter Muller’s PDT Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Boot Barn Holdings Inc (NYSE:BOOT) but similarly valued. These stocks are Middlesex Water Company (NASDAQ:MSEX), NuCana plc (NASDAQ:NCNA), Century Communities, Inc (NYSE:CCS), and Marine Products Corp. (NYSE:MPX). This group of stocks’ market valuations match BOOT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MSEX | 9 | 46764 | 1 |
| NCNA | 4 | 25185 | -1 |
| CCS | 22 | 216936 | 1 |
| MPX | 5 | 28478 | 2 |
| Average | 10 | 79341 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $158 million in BOOT’s case. Century Communities, Inc (NYSE:CCS) is the most popular stock in this table. On the other hand NuCana plc (NASDAQ:NCNA) is the least popular one with only 4 bullish hedge fund positions. Boot Barn Holdings Inc (NYSE:BOOT) 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 CCS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
