During the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 7 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Fiesta Restaurant Group Inc (NASDAQ:FRGI) and see how the stock is affected by the recent hedge fund activity.
Hedge fund interest in Fiesta Restaurant Group Inc (NASDAQ:FRGI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare FRGI to other stocks including PDL BioPharma Inc. (NASDAQ:PDLI), Barrett Business Services, Inc. (NASDAQ:BBSI), and Allied Motion Technologies, Inc. (NASDAQ:AMOT) to get a better sense of its popularity.
According to most traders, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are over 8000 funds in operation today, Our experts look at the top tier of this group, approximately 750 funds. Most estimates calculate that this group of people have their hands on most of the hedge fund industry's total asset base, and by keeping track of their highest performing picks, Insider Monkey has deciphered numerous investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let's take a glance at the latest hedge fund action regarding Fiesta Restaurant Group Inc (NASDAQ:FRGI).
Hedge fund activity in Fiesta Restaurant Group Inc (NASDAQ:FRGI)
Heading into the first quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FRGI over the last 14 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Fiesta Restaurant Group Inc (NASDAQ:FRGI) was held by Leucadia National, which reported holding $56.3 million worth of stock at the end of December. It was followed by Private Capital Management with a $14.2 million position. Other investors bullish on the company included Millennium Management, Birch Run Capital, and D E Shaw.
Because Fiesta Restaurant Group Inc (NASDAQ:FRGI) has faced a decline in interest from the smart money, we can see that there is a sect of hedgies that decided to sell off their full holdings in the third quarter. At the top of the heap, Principal Global Investors's Columbus Circle Investors dropped the largest position of all the hedgies watched by Insider Monkey, worth about $8.7 million in stock, and Philippe Laffont's Coatue Management was right behind this move, as the fund said goodbye to about $0.7 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to Fiesta Restaurant Group Inc (NASDAQ:FRGI). These stocks are PDL BioPharma Inc. (NASDAQ:PDLI), Barrett Business Services, Inc. (NASDAQ:BBSI), Allied Motion Technologies, Inc. (NASDAQ:AMOT), and CIRCOR International, Inc. (NYSE:CIR). This group of stocks' market valuations resemble FRGI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PDLI,16,57468,4 BBSI,13,64664,0 AMOT,12,39294,-2 CIR,6,98829,1 Average,11.75,65064,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $116 million in FRGI's case. PDL BioPharma Inc. (NASDAQ:PDLI) is the most popular stock in this table. On the other hand CIRCOR International, Inc. (NYSE:CIR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Fiesta Restaurant Group Inc (NASDAQ:FRGI) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately FRGI wasn't nearly as popular as these 15 stock and hedge funds that were betting on FRGI were disappointed as the stock returned -19.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.