At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL).
Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) shareholders have witnessed a decrease in support from the world's most elite money managers in recent months. Our calculations also showed that CBRL 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_673972" align="aligncenter" width="396"] Blair Levinsky of Waratah Capital Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a look at the fresh hedge fund action surrounding Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL).
How are hedge funds trading Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL)?
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CBRL over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) was held by AQR Capital Management, which reported holding $29.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $24.4 million position. Other investors bullish on the company included Two Sigma Advisors, PEAK6 Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Waratah Capital Advisors allocated the biggest weight to Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), around 1.12% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, dishing out 0.58 percent of its 13F equity portfolio to CBRL.
Because Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) has faced bearish sentiment from hedge fund managers, it's safe to say that there exists a select few fund managers who sold off their full holdings in the first quarter. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, worth close to $17.5 million in stock. Noam Gottesman's fund, GLG Partners, also dumped its stock, about $12.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) but similarly valued. These stocks are Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB), National Beverage Corp. (NASDAQ:FIZZ), Stepan Company (NYSE:SCL), and BancorpSouth Bank (NYSE:BXS). This group of stocks' market values are similar to CBRL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HOMB,20,15614,8 FIZZ,20,202468,-1 SCL,10,48020,-3 BXS,15,36662,1 Average,16.25,75691,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $101 million in CBRL's case. Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) is the most popular stock in this table. On the other hand Stepan Company (NYSE:SCL) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on CBRL as the stock returned 45.7% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.