AFC Enterprises, Inc. (NASDAQ:AFCE) was in 17 hedge funds’ portfolio at the end of March. AFCE has seen an increase in hedge fund sentiment of late. There were 15 hedge funds in our database with AFCE holdings at the end of the previous quarter.
According to most stock holders, hedge funds are perceived as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey look at the bigwigs of this club, around 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total asset base, and by tracking their highest performing picks, we have unearthed a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as integral, bullish insider trading activity is a second way to break down the marketplace. As the old adage goes: there are plenty of motivations for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this method if shareholders understand what to do (learn more here).
With these “truths” under our belt, let’s take a look at the latest action surrounding AFC Enterprises, Inc. (NASDAQ:AFCE).
What does the smart money think about AFC Enterprises, Inc. (NASDAQ:AFCE)?
At Q1’s end, a total of 17 of the hedge funds we track held long positions in this stock, a change of 13% from the first quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly.
When looking at the hedgies we track, Richard Chilton’s Chilton Investment Company had the most valuable position in AFC Enterprises, Inc. (NASDAQ:AFCE), worth close to $62.7 million, comprising 1.7% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $25.7 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers that are bullish include Mark Broach’s Manatuck Hill Partners, Gregory Bylinsky and Jefferson Gramm’s Bandera Partners and Robert B. Gillam’s McKinley Capital Management.
Consequently, specific money managers have been driving this bullishness. Manor Road Capital Partners, managed by John Ku, initiated the biggest position in AFC Enterprises, Inc. (NASDAQ:AFCE). Manor Road Capital Partners had 4.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $3.5 million position during the quarter. The following funds were also among the new AFCE investors: David Costen Haley’s HBK Investments, John Bader’s Halcyon Asset Management, and J. Alan Reid, Jr.’s Forward Management.
How are insiders trading AFC Enterprises, Inc. (NASDAQ:AFCE)?
Insider buying is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time period, AFC Enterprises, Inc. (NASDAQ:AFCE) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to AFC Enterprises, Inc. (NASDAQ:AFCE). These stocks are Bob Evans Farms Inc (NASDAQ:BOBE), Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), Sonic Corporation (NASDAQ:SONC), Krispy Kreme Doughnuts (NYSE:KKD), and BJ’s Restaurants, Inc. (NASDAQ:BJRI). This group of stocks belong to the restaurants industry and their market caps are similar to AFCE’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Bob Evans Farms Inc (NASDAQ:BOBE) | 10 | 2 | 2 |
| Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) | 11 | 0 | 3 |
| Sonic Corporation (NASDAQ:SONC) | 12 | 0 | 8 |
| Krispy Kreme Doughnuts (NYSE:KKD) | 21 | 0 | 3 |
| BJ’s Restaurants, Inc. (NASDAQ:BJRI) | 10 | 0 | 3 |
With the returns exhibited by Insider Monkey’s time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and AFC Enterprises, Inc. (NASDAQ:AFCE) shareholders fit into this picture quite nicely.
