Where Do Hedge Funds Stand On Vista Outdoor Inc (VSTO)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Vista Outdoor Inc (NYSE:VSTO) in this article.

Vista Outdoor Inc (NYSE:VSTO) has experienced an increase in hedge fund interest in recent months. Vista Outdoor Inc (NYSE:VSTO) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 28. Our calculations also showed that VSTO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a peek at the new hedge fund action surrounding Vista Outdoor Inc (NYSE:VSTO).

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

At the end of June, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in VSTO a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Gates Capital Management, managed by Jeffrey Gates, holds the most valuable position in Vista Outdoor Inc (NYSE:VSTO). Gates Capital Management has a $193.5 million position in the stock, comprising 5.6% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $49 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions contain Joe Milano’s Greenhouse Funds, Renaissance Technologies and Richard Driehaus’s Driehaus Capital. 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 5.75% of its 13F portfolio. Gates Capital Management is also relatively very bullish on the stock, earmarking 5.58 percent of its 13F equity portfolio to VSTO.

Now, key hedge funds have jumped into Vista Outdoor Inc (NYSE:VSTO) headfirst. SG Capital Management, managed by Ken Grossman and Glen Schneider, assembled the biggest position in Vista Outdoor Inc (NYSE:VSTO). SG Capital Management had $5.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new VSTO investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Michael Gelband’s ExodusPoint Capital, and Noam Gottesman’s GLG Partners.

Let’s also examine 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 Perficient, Inc. (NASDAQ:PRFT), NovaGold Resources Inc. (NYSE:NG), Minerals Technologies Inc (NYSE:MTX), Constellium SE (NYSE:CSTM), Allegheny Technologies Incorporated (NYSE:ATI), Microvision, Inc. (NASDAQ:MVIS), and Crescent Point Energy Corp (NYSE:CPG). This group of stocks’ market caps are closest to VSTO’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $409 million in VSTO’s case. Constellium SE (NYSE:CSTM) is the most popular stock in this table. On the other hand Minerals Technologies Inc (NYSE:MTX) is the least popular one with only 10 bullish hedge fund positions. Vista Outdoor Inc (NYSE:VSTO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VSTO is 71.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately VSTO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VSTO were disappointed as the stock returned -5.4% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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