Today’s Drop of El Pollo LoCo Holdings Inc (LOCO) Shows Hedge Funds’ Are Right to Be Bearish

As said earlier, hedge funds that held long positions in the company, chose to withdraw their capital during the first quarter. The $30.5 million aggregate value of positions held by 11 hedge funds among those that we track fell from $37.7 million held by 13 funds at the end of December. Moreover, in the most equity portfolios of investors that disclosed stakes in El Pollo LoCo as of the end of March, the holdings amass tiny portions, which shows that investors were cautious enough to limit their exposure to the company.

However, among the funds from our database, Donald Chiboucis‘ Columbus Circle Investors held the largest stake in El Pollo LoCo Holdings Inc (NASDAQ:LOCO) at the end of March, but closed the position in the following quarter by having unloaded around 260,300 shares. Mark Coe’s Coe Capital Management and Richard Driehaus’ Driehaus Capital followed suit and unloaded their entire positions of 114,100 shares and 79,300 shares during the same period.

A similar bearish sentiment about El Pollo Loco could be observed among insiders as well. For example, in June, Samuel Borgese, a director on El Pollo LoCo’s board, sold his entire stake of 42,449 shares. Moreover, the company’s Chief Marketing Officer, Edward Valle, used his stock options to acquire 175,000 shares at an average price of $3.08 and then sold them at $21.85 per unit.

So, hedge funds turned further bearish during the second quarter as the stock lost around 28% during this period. And taking into account today’s fall, they have been right to do so. We still need a couple of days until the current round of filings is over, after which we will be able to compile the data and analyze the overall hedge fund sentiment around El Pollo LoCo Holdings Inc (NASDAQ:LOCO). However, at the moment, the numbers look bleak and the company doesn’t sound like a good investment at the moment.

Disclosure: none