U.S. markets open in 2 hours 35 minutes

Hedge Funds See Opportunity In Bloomin’ Brands Inc (BLMN)

Debasis Saha

In this article you are going to find out whether hedge funds think Bloomin' Brands Inc (NASDAQ:BLMN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Bloomin' Brands Inc (NASDAQ:BLMN) a cheap investment today? Prominent investors are turning bullish. The number of bullish hedge fund positions rose by 6 recently. Our calculations also showed that BLMN 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_30594" align="aligncenter" width="400"] Barry Rosenstein of JANA Partners[/caption]

Barry Rosenstein JANA PARTNERS

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. Now we're going to take a peek at the latest hedge fund action encompassing Bloomin' Brands Inc (NASDAQ:BLMN).

What does smart money think about Bloomin' Brands Inc (NASDAQ:BLMN)?

At Q1's end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in BLMN a year ago. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Is BLMN A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, JANA Partners, managed by Barry Rosenstein, holds the number one position in Bloomin' Brands Inc (NASDAQ:BLMN). JANA Partners has a $57 million position in the stock, comprising 7.3% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $12.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism include Michael Zimmerman's Prentice Capital Management, and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position JANA Partners allocated the biggest weight to Bloomin' Brands Inc (NASDAQ:BLMN), around 7.27% of its 13F portfolio. Prentice Capital Management is also relatively very bullish on the stock, earmarking 2.01 percent of its 13F equity portfolio to BLMN.

As aggregate interest increased, specific money managers have jumped into Bloomin' Brands Inc (NASDAQ:BLMN) headfirst. Prentice Capital Management, managed by Michael Zimmerman, created the most valuable position in Bloomin' Brands Inc (NASDAQ:BLMN). Prentice Capital Management had $4.2 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $1.4 million investment in the stock during the quarter. The other funds with brand new BLMN positions are Ken Griffin's Citadel Investment Group, Benjamin A. Smith's Laurion Capital Management, and Marc Majzner's Clearline Capital.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Bloomin' Brands Inc (NASDAQ:BLMN) but similarly valued. We will take a look at Qutoutiao Inc. (NASDAQ:QTT), PDC Energy Inc (NASDAQ:PDCE), Oxford Industries, Inc. (NYSE:OXM), and Bloom Energy Corporation (NYSE:BE). All of these stocks' market caps are similar to BLMN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QTT,9,5239,4 PDCE,25,114905,-7 OXM,12,27638,0 BE,10,44648,-3 Average,14,48108,-1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $88 million in BLMN's case. PDC Energy Inc (NASDAQ:PDCE) is the most popular stock in this table. On the other hand Qutoutiao Inc. (NASDAQ:QTT) is the least popular one with only 9 bullish hedge fund positions. Bloomin' Brands Inc (NASDAQ:BLMN) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on BLMN as the stock returned 70.4% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

[company-follow-email id=1546417][/company-follow-email]

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

Related Content