Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won't accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Boot Barn Holdings Inc (NYSE:BOOT) investors should be aware of a decrease in enthusiasm from smart money recently. Our calculations also showed that BOOT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most shareholders, hedge funds are assumed to be unimportant, old investment vehicles of the past. While there are more than 8000 funds with their doors open at present, We look at the leaders of this club, approximately 750 funds. Most estimates calculate that this group of people watch over bulk of all hedge funds' total capital, and by following their highest performing investments, Insider Monkey has determined numerous investment strategies that have historically outpaced the market. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the new hedge fund action regarding Boot Barn Holdings Inc (NYSE:BOOT).
What have hedge funds been doing with Boot Barn Holdings Inc (NYSE:BOOT)?
Heading into the third quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in BOOT a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Marshall Wace LLP, managed by Paul Marshall and Ian Wace, holds the biggest position in Boot Barn Holdings Inc (NYSE:BOOT). Marshall Wace LLP has a $41.5 million position in the stock, comprising 0.3% of its 13F portfolio. On Marshall Wace LLP's heels is Li Ran of Half Sky Capital, with a $30.6 million position; 24.9% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions contain Richard Driehaus's Driehaus Capital, Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital and Renaissance Technologies.
Judging by the fact that Boot Barn Holdings Inc (NYSE:BOOT) has faced a decline in interest from the smart money, it's safe to say that there was a specific group of hedgies that decided to sell off their full holdings in the second quarter. Intriguingly, Dmitry Balyasny's Balyasny Asset Management sold off the largest stake of the "upper crust" of funds monitored by Insider Monkey, totaling an estimated $6.8 million in stock, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital was right behind this move, as the fund dumped about $2.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the second quarter.
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 Vivint Solar Inc (NYSE:VSLR), Global Brass and Copper Holdings Inc (NYSE:BRSS), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), and Benchmark Electronics, Inc. (NYSE:BHE). This group of stocks' market valuations resemble BOOT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VSLR,11,36996,0 BRSS,17,228771,1 SPPI,9,42962,-4 BHE,12,41025,-7 Average,12.25,87439,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $186 million in BOOT's case. Global Brass and Copper Holdings Inc (NYSE:BRSS) is the most popular stock in this table. On the other hand Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Boot Barn Holdings Inc (NYSE:BOOT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BOOT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BOOT were disappointed as the stock returned -2.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.