How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL).
Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) was in 23 hedge funds' portfolios at the end of March. CBRL has experienced an increase in activity from the world's largest hedge funds lately. There were 19 hedge funds in our database with CBRL positions at the end of the previous quarter. Our calculations also showed that cbrl isn't among the 30 most popular stocks among hedge funds.
Today there are tons of gauges stock traders put to use to size up publicly traded companies. Some of the less utilized gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best money managers can outclass the broader indices by a very impressive margin (see the details here).
Let's take a look at the key hedge fund action surrounding Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL).
How have hedgies been 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 long this stock, a change of 21% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CBRL over the last 15 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Marshall Wace LLP, managed by Paul Marshall and Ian Wace, holds the biggest position in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). Marshall Wace LLP has a $57.1 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is PEAK6 Capital Management, led by Matthew Hulsizer, holding a $29.9 million call position; the fund has 0.2% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise John Overdeck and David Siegel's Two Sigma Advisors, Ken Griffin's Citadel Investment Group and Jim Simons's Renaissance Technologies.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) headfirst. Gotham Asset Management, managed by Joel Greenblatt, established the most valuable position in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). Gotham Asset Management had $6 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $3.4 million investment in the stock during the quarter. The following funds were also among the new CBRL investors: Steve Cohen's Point72 Asset Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Minhua Zhang's Weld Capital Management.
Let's check out hedge fund activity in other stocks similar to Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). We will take a look at Avalara, Inc. (NYSE:AVLR), Blackbaud, Inc. (NASDAQ:BLKB), Eagle Materials, Inc. (NYSE:EXP), and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). This group of stocks' market values are closest to CBRL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVLR,27,889800,13 BLKB,11,72252,-2 EXP,29,724390,4 ACAD,20,1311418,0 Average,21.75,749465,3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $749 million. That figure was $145 million in CBRL's case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand Blackbaud, Inc. (NASDAQ:BLKB) is the least popular one with only 11 bullish hedge fund positions. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CBRL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CBRL were disappointed as the stock returned -1.6% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.