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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Carrols Restaurant Group, Inc. (NASDAQ:TAST) based on that data.
Hedge fund interest in Carrols Restaurant Group, Inc. (NASDAQ:TAST) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TAST isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Ethan Allen Interiors Inc. (NYSE:ETH), Central Puerto S.A. (NYSE:CEPU), and Triumph Group Inc (NYSE:TGI) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most traders, hedge funds are seen as worthless, outdated investment tools of years past. While there are over 8000 funds trading at present, We choose to focus on the elite of this club, approximately 850 funds. These investment experts handle the majority of the smart money's total capital, and by keeping an eye on their inimitable picks, Insider Monkey has identified several investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we're going to take a look at the latest hedge fund action encompassing Carrols Restaurant Group, Inc. (NASDAQ:TAST).
Do Hedge Funds Think TAST Is A Good Stock To Buy Now?
At third quarter's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TAST over the last 21 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Carrols Restaurant Group, Inc. (NASDAQ:TAST) was held by Royce & Associates, which reported holding $14.6 million worth of stock at the end of September. It was followed by Portolan Capital Management with a $11.7 million position. Other investors bullish on the company included Arrowstreet Capital, Granite Point Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Portolan Capital Management allocated the biggest weight to Carrols Restaurant Group, Inc. (NASDAQ:TAST), around 1.32% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.16 percent of its 13F equity portfolio to TAST.
Due to the fact that Carrols Restaurant Group, Inc. (NASDAQ:TAST) has witnessed declining sentiment from hedge fund managers, it's safe to say that there is a sect of funds who were dropping their full holdings last quarter. At the top of the heap, J. Carlo Cannell's Cannell Capital said goodbye to the largest stake of the 750 funds followed by Insider Monkey, comprising an estimated $6.5 million in stock, and Alan Fournier's Pennant Capital Management was right behind this move, as the fund cut about $0.2 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Carrols Restaurant Group, Inc. (NASDAQ:TAST) but similarly valued. We will take a look at Ethan Allen Interiors Inc. (NYSE:ETH), Central Puerto S.A. (NYSE:CEPU), Triumph Group Inc (NYSE:TGI), Kandi Technolgies Group Inc. (NASDAQ:KNDI), VSE Corporation (NASDAQ:VSEC), Pandion Therapeutics Inc. (NASDAQ:PAND), and Urstadt Biddle Properties Inc. (NYSE:UBP). All of these stocks' market caps are closest to TAST's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ETH,15,40292,2 CEPU,2,4910,-2 TGI,13,43185,-1 KNDI,1,310,-1 VSEC,3,2324,1 PAND,14,68560,14 UBP,3,700,2 Average,7.3,22897,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $35 million in TAST's case. Ethan Allen Interiors Inc. (NYSE:ETH) is the most popular stock in this table. On the other hand Kandi Technolgies Group Inc. (NASDAQ:KNDI) is the least popular one with only 1 bullish hedge fund positions. Carrols Restaurant Group, Inc. (NASDAQ:TAST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TAST is 58.7. Stocks with 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 top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on TAST, though not to the same extent, as the stock returned 11.3% since Q3 (through December 8th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.