Most investors tend to think that hedge funds and other asset managers are worthless because they can’t even beat simple index fund portfolios. In fact, most people expect hedge funds to compete and outperform the bull market we have witnessed in recent years. However, hedge funds are usually partially hedged and aim to generate attractive risk-adjusted returns rather than following the ups and downs of the stock markets with the expectation that they will outperform the broader market. Our research shows that some hedge funds have excellent stock picking skills (and we can identify these hedge funds in advance quite precisely), so let’s take a look at the smart money sentiment towards Burlington. Stores Inc (NYSE: BURL).
Burlington Stores Inc (NYSE: BURL) investors should be aware of the recent increase in support from the world’s most elite fund managers. Burlington Stores Inc (NYSE: BURL) was listed in 32 hedge fund portfolios at the end of the first quarter of 2021. The all-time high for this statistic is 40. Our calculations also showed that BURL is not among the 30 most popular stocks. . among hedge funds (click for Q1 ranking).
According to most traders, hedge funds are seen as slow and outdated investment tools of years gone by. Although there are over 8,000 funds traded today, our experts choose to focus on the top tier of this club, around 850 funds. These hedge fund managers oversee the majority of the total asset base of the hedge fund industry, and by paying attention to their top performing equity investments, Insider Monkey has uncovered many investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy has outperformed S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. In addition, our monthly newsletter’s long equity selection portfolio has returned 206.8% since March 2017 (through May 2021) and has beaten the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter from our website.
Ryan Frick of Dorsal Capital
At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the top 10 electric vehicle stocks to pick the next Tesla that will deliver 10x yield. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to market arguments at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. With all of that in mind, let’s review the latest hedge fund action regarding Burlington Stores Inc (NYSE: BURL).
Do hedge funds think BURL is a good stock to buy now?
At the end of March, a total of 32 of the hedge funds tracked by Insider Monkey were long on this stock, a change of 10% from the fourth quarter of 2020. Below, you can see the evolution of hedge fund sentiment towards BURL over the last 23 quarters. As the capital of hedge funds changes hands, there is a select group of outstanding hedge fund managers who were significantly increasing their stakes (or already accumulating significant positions).
Of these funds, Third Point held the largest stake in Burlington Stores Inc (NYSE: BURL), which stood at $ 448.2 million at the end of the fourth quarter. In second place was Adage Capital Management which raised $ 356 million in shares. Alkeon Capital Management, Scopus Asset Management and Dorsal Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders in the company. In terms of the portfolio weights assigned to each position, MIK Capital assigned the largest weight to Burlington Stores Inc (NYSE: BURL), approximately 3.99% of its 13F portfolio. Third Point is also relatively very bullish on the stock, designating 3.02% of its 13F stock portfolio at BURL.
Now the major hedge funds themselves were breaking new ground. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, took the largest position in Burlington Stores Inc (NYSE: BURL). Alkeon Capital Management had invested $ 255.2 million in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $ 127 million position during the quarter. Other funds with new equity positions are Athanor Capital by Parvinder Thiara, Peter Rathjens, Bruce Clarke and Arrowstreet Capital by John Campbell, and Scopus Asset Management by Alexander Mitchell.
Now let’s review hedge fund activity in other stocks – not necessarily in the same industry as Burlington Stores Inc (NYSE: BURL) but of similar value. These stocks are Dover Corporation (NYSE: DOV), 10x Genomics, Inc. (NASDAQ: TXG), Discovery Inc. (NASDAQ: DISCA), Trimble Inc. (NASDAQ: TRMB), M&T Bank Corporation (NYSE: MTB), Teleflex Incorporated (NYSE: TFX) and KB Financial Group, Inc. (NYSE: KB). The market values of this group of shares correspond to the market value of BURL.
[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF DOV position, 26.639746, -6 TXG, 23.1217339, -10 DISCA, 48.590723.20 TRMB, 23.1515928, 2 VTT, 36 671109.3 TFX, 33.571638.3 KB, 9.43761.4 Medium, 28.3.750035.2.3 [/table]
Check the table here if you have formatting issues.
As you can see, these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $ 750 million. That figure was $ 1,441 million in the case of BURL. Discovery Inc. (NASDAQ: DISCA) is the most popular stock in this table. On the other hand, KB Financial Group, Inc. (NYSE: KB) is the least popular with only 9 bullish hedge fund positions. Burlington Stores Inc (NYSE: BURL) isn’t the most popular stock in this group, but hedge fund interest is still above average. Our overall hedge fund sentiment score for BURL is 61.5. Stocks with a 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 the 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 22.8% in 2021 through July 2 and have consistently beaten the market by 6 percentage points. Hedge funds were also right to bet on BURL, but not to the same extent, as the stock has returned 11.1% since the first quarter (through July 2) and has also outperformed the market.
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Disclosure: none. This article originally appeared on Insider Monkey.