Were Hedge Funds Right About Burlington Stores Inc (BURL) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Burlington Stores Inc (NYSE:BURL) based on that data and determine whether they were really smart about the stock.

Burlington Stores Inc (NYSE:BURL) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that BURL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ryan Frick of Dorsal Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the fresh hedge fund action surrounding Burlington Stores Inc (NYSE:BURL).

Hedge fund activity in Burlington Stores Inc (NYSE:BURL)

At the end of the first quarter, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BURL over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

More specifically, Adage Capital Management was the largest shareholder of Burlington Stores Inc (NYSE:BURL), with a stake worth $211.3 million reported as of the end of September. Trailing Adage Capital Management was Third Point, which amassed a stake valued at $178.3 million. Samlyn Capital, Dorsal Capital Management, and Armistice Capital 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 Dorsal Capital Management allocated the biggest weight to Burlington Stores Inc (NYSE:BURL), around 6.09% of its 13F portfolio. MIK Capital is also relatively very bullish on the stock, dishing out 3.87 percent of its 13F equity portfolio to BURL.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Samlyn Capital, managed by Robert Pohly, initiated the biggest position in Burlington Stores Inc (NYSE:BURL). Samlyn Capital had $104.4 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $40.9 million investment in the stock during the quarter. The other funds with brand new BURL positions are Louis Bacon’s Moore Global Investments, James Parsons’s Junto Capital Management, and Kamyar Khajavi’s MIK Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Burlington Stores Inc (NYSE:BURL) but similarly valued. We will take a look at Liberty Global plc (NASDAQ:LBTYA), Insulet Corporation (NASDAQ:PODD), Occidental Petroleum Corporation (NYSE:OXY), and Pembina Pipeline Corp (NYSE:PBA). This group of stocks’ market caps are closest to BURL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $724 million. That figure was $938 million in BURL’s case. Insulet Corporation (NASDAQ:PODD) is the most popular stock in this table. On the other hand Pembina Pipeline Corp (NYSE:PBA) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Burlington Stores Inc (NYSE:BURL) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BURL, though not to the same extent, as the stock returned 24.3% in Q2 and outperformed the market as well.

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