Hedge Funds Are Piling Into Huge 5 Sporting Items Company (BGFV)


Many prominent investors, including Warren Buffett, David Tepper, and Stan Druckermiller, were cautious about the current bull market and missed it when the stock market hit another high in the past few weeks. Tech hedge funds, on the other hand, weren’t shy, posting double-digit market gains. Financial, energy, and industrials were the hardest hit at first, but many of these stocks have delivered strong returns since November, and hedge funds have even added to their positions in these stocks. In this article, we’ll tell you how hedge fund sentiment has changed lately towards the Big 5 Sporting Goods Corporation (NYSE: BIG).

is Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is it going to start soon? Smart money was in a bullish mood. The number of long hedge fund positions has increased by 5 in the past few months. Big 5 Sporting Goods Corporation (NASDAQ: BGFV) was in 19 hedge fund portfolios at the end of the second quarter of 2021. The all-time high for this statistic is 19. This means that the number of hedge fund positions in this stock is currently bullish sitting at its all-time high. Our calculations also showed that BGFV is not in the top 30 most popular stocks among hedge funds (click for the Q2 ranking).

The reputation of hedge funds as shrewd investors has been tarnished over the past decade as their hedged returns have not kept up with the unsecured returns of market indices. Our research has shown that hedge fund small-cap stock selection beat the market by double digits annually between 1999 and 2016, but the outperformance margin has been decreasing in recent years. Nevertheless, we were able to identify a selected group of hedge fund holdings in advance that exceeded the S&P 500 ETFs by 79 percentage points since March 2017 (details see here). We were also able to identify in advance a select group of hedge fund holdings that lagged the market by 10 percentage points annually between 2006 and 2017. Interestingly, the underperformance margin of these stocks has increased in recent years. Investors who are long on the market and short these stocks would have earned more than 27% annual return between 2015 and 2017. We’ve been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

The story goes on

David E. Shaw of DE Shaw

David E. Shaw of DE Shaw

With all of this in mind, let’s analyze recent hedge fund actions regarding the Big 5 Sporting Goods Corporation (NASDAQ: BGFV).

Do hedge funds think BGFV is a good stock to buy now?

At the end of the second quarter, a total of 19 hedge funds tracked by Insider Monkey were long in this stock, up 36% from the previous quarter. On the other hand, a year ago there were a total of 6 hedge funds with a bullish position in BGFV. So let’s find out which hedge funds were among the top keepers in the stock and which hedge funds were making great strides.

Is BGFV a good share to buy?

Among those funds, Lonestar Capital Management held the most valuable stake in Big 5 Sporting Goods Corporation (NASDAQ: BGFV), which was worth $ 9.7 million at the end of the second quarter. Second was Arrowstreet Capital, which amassed $ 7.8 million in shares. Millennium Management, PDT Partners, and DE Shaw were also very fond of the stock and became one of the company’s largest hedge fund owners. In terms of the portfolio weights assigned to each position, Lonestar Capital Management assigned the Big 5 Sporting Goods Corporation (NASDAQ: BGFV) the largest weight, approximately 1.42% of their 13F portfolio. PDT Partners is also relatively optimistic about the stock and is donating 0.26 percent of its 13F stock portfolio to BGFV.

Now major asset managers led the herd of cops. DE Shaw, led by DE Shaw, has created the largest position in the Big 5 Sporting Goods Corporation (NASDAQ: BGFV). At the end of the quarter, DE Shaw had invested $ 2.8 million in the company. Matthew Hulsizer’s PEAK6 Capital Management also invested $ 2.3 million in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, DE Shaws DE Shaw and Paul Marshall and Ian Wace Marshall Wace LLP.

Now let’s take a look at hedge fund activity in other stocks – not necessarily in the same industry as the Big 5 Sporting Goods Corporation (NASDAQ: BGFV), but similarly valued. We’re going to take a look at Ebang International Holdings Inc. (NASDAQ: EBON), Catchmark Timber Trust Inc (NYSE: CTT), IVERIC bio, Inc. (NASDAQ: ISEE), ShotSpotter, Inc. (NASDAQ: SSTI), ZIOPHARM Oncology Inc. (NASDAQ: ZIOP), Entravision Communications Corporation (NYSE: EVC), and Thermon Group Holdings, Inc. (NYSE: THR). The market values ​​of this group of shares are similar to the market value of BGFV.

[table] Ticker, number of HRs with positions, total value of the HR positions (x1000), change in the HR position EBON, 5.3998, -3 CTT, 12.64564, -1 ISEE, 26.298526.0 SSTI, 8.56174, 1 ZIOP, 12.109128.4 EVC, 17,38659.5 THR, 10.21669, -2 average, 12.9.84674.0.6 [/table]

View the table here if you have formatting problems.

As you can see, these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $ 85 million. In the case of BGFV, that number was $ 43 million. IVERIC bio, Inc. (NASDAQ: ISEE) is the most popular stock on this table. On the flip side, Ebang International Holdings Inc. (NASDAQ: EBON) is the least popular with only 5 bullish hedge fund positions. Big 5 Sporting Goods Corporation (NASDAQ: BGFV) isn’t the most popular stock in this group, but interest in hedge funds is still above average. Our hedge fund sentiment score for BGFV is 73.3 in total. Stocks with a higher number of hedge fund positions relative to other stocks and relative to their historical range receive a higher sentiment score. This is a slightly positive sign, but we prefer to spend our time researching stocks that hedge funds are piling up on. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 40 percentage points. These stocks rose 24% through October 22, 2021, again beating the market 1.6 percentage points. Unfortunately, BGFV wasn’t nearly as popular as these 5 stocks and hedge funds that bet on BGFV were disappointed, as the stock gained -4.3% since the end of June (until October 22nd) and lagged behind the market. If you’re interested in investing in large-cap stocks with big upside potential, check out the top 5 most popular stocks among hedge funds, as many of these stocks have already outperformed the market since 2019.

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

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