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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards The Buckle, Inc. (NYSE:BKE).
Is BKE a good stock to buy now? The Buckle, Inc. (NYSE:BKE) has seen an increase in hedge fund sentiment recently. The Buckle, Inc. (NYSE:BKE) was in 18 hedge funds' portfolios at the end of September. The all time high for this statistic is 21. Our calculations also showed that BKE isn't among the 30 most popular stocks among hedge funds (click for Q3 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In the eyes of most stock holders, hedge funds are seen as worthless, outdated financial vehicles of the past. While there are more than 8000 funds with their doors open at the moment, Our experts look at the masters of this club, around 850 funds. It is estimated that this group of investors oversee most of the hedge fund industry's total asset base, and by tailing their best picks, Insider Monkey has unsheathed numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Eric Sprott of Sprott Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind let's go over the fresh hedge fund action regarding The Buckle, Inc. (NYSE:BKE).
Do Hedge Funds Think BKE Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in BKE a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Buckle, Inc. (NYSE:BKE) was held by Renaissance Technologies, which reported holding $16.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $11.3 million position. Other investors bullish on the company included D E Shaw, Sprott Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to The Buckle, Inc. (NYSE:BKE), around 0.27% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to BKE.
As aggregate interest increased, key money managers have jumped into The Buckle, Inc. (NYSE:BKE) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in The Buckle, Inc. (NYSE:BKE). Marshall Wace LLP had $3.2 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $0.9 million position during the quarter. The other funds with brand new BKE positions are Minhua Zhang's Weld Capital Management, Donald Sussman's Paloma Partners, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's now take a look at hedge fund activity in other stocks similar to The Buckle, Inc. (NYSE:BKE). These stocks are Re/Max Holdings Inc (NYSE:RMAX), Inseego Corp. (NASDAQ:INSG), Adverum Biotechnologies, Inc. (NASDAQ:ADVM), New Frontier Health Corporation (NYSE:NFH), Yalla Group Limited (NYSE:YALA), Xenia Hotels & Resorts Inc (NYSE:XHR), and Cornerstone Building Brands, Inc. (NYSE:CNR). This group of stocks' market caps are closest to BKE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RMAX,11,48168,4 INSG,11,19774,2 ADVM,30,413121,5 NFH,15,170005,0 YALA,7,21747,7 XHR,9,29036,-1 CNR,22,84894,3 Average,15,112392,2.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $56 million in BKE's case. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is the most popular stock in this table. On the other hand Yalla Group Limited (NYSE:YALA) is the least popular one with only 7 bullish hedge fund positions. The Buckle, Inc. (NYSE:BKE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BKE is 55.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on BKE as the stock returned 59.5% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.