The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded The Buckle, Inc. (NYSE:BKE) based on those filings.
Is The Buckle, Inc. (NYSE:BKE) the right pick for your portfolio? Investors who are in the know are taking a bearish view. The number of long hedge fund bets retreated by 6 lately. Our calculations also showed that BKE 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.
[caption id="attachment_27480" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind let's take a glance at the key hedge fund action regarding The Buckle, Inc. (NYSE:BKE).
What have hedge funds been doing with The Buckle, Inc. (NYSE:BKE)?
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the fourth quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in BKE a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in The Buckle, Inc. (NYSE:BKE) was held by Renaissance Technologies, which reported holding $21 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 Sprott Asset Management, D E Shaw, and Winton Capital 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 0.36% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to BKE.
Because The Buckle, Inc. (NYSE:BKE) has faced a decline in interest from hedge fund managers, it's safe to say that there is a sect of fund managers who were dropping their entire stakes in the first quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the biggest investment of the 750 funds watched by Insider Monkey, worth close to $9.9 million in stock. Israel Englander's fund, Millennium Management, also said goodbye to its stock, about $1.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 6 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to The Buckle, Inc. (NYSE:BKE). We will take a look at Vocera Communications Inc (NYSE:VCRA), American Finance Trust, Inc. (NASDAQ:AFIN), First Bancorp (NASDAQ:FBNC), and BellRing Brands, Inc. (NYSE:BRBR). This group of stocks' market valuations resemble BKE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VCRA,15,99255,2 AFIN,10,13470,2 FBNC,13,42593,-1 BRBR,15,135847,-1 Average,13.25,72791,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $47 million in BKE's case. Vocera Communications Inc (NYSE:VCRA) is the most popular stock in this table. On the other hand American Finance Trust, Inc. (NASDAQ:AFIN) is the least popular one with only 10 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. 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately BKE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on BKE were disappointed as the stock returned 10.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.