Are Hedge Funds Still Bullish On Bloomin’ Brands Inc (BLMN)?

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 second 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 Bloomin’ Brands Inc (NASDAQ:BLMN) based on that data and determine whether they were really smart about the stock.

Is Bloomin’ Brands Inc (NASDAQ:BLMN) a buy right now? The best stock pickers were becoming less confident. The number of long hedge fund bets fell by 1 recently. Bloomin’ Brands Inc (NASDAQ:BLMN) was in 23 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 30. Our calculations also showed that BLMN isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Barry Rosenstein - Jana Partners

Barry Rosenstein of JANA Partners

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 precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a look at the new hedge fund action encompassing Bloomin’ Brands Inc (NASDAQ:BLMN).

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

At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BLMN over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, JANA Partners was the largest shareholder of Bloomin’ Brands Inc (NASDAQ:BLMN), with a stake worth $78.4 million reported as of the end of September. Trailing JANA Partners was Arrowstreet Capital, which amassed a stake valued at $18.9 million. Samlyn Capital, Graham Capital Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position JANA Partners allocated the biggest weight to Bloomin’ Brands Inc (NASDAQ:BLMN), around 7.36% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, setting aside 0.6 percent of its 13F equity portfolio to BLMN.

Since Bloomin’ Brands Inc (NASDAQ:BLMN) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that elected to cut their positions entirely in the second quarter. Intriguingly, Michael Zimmerman’s Prentice Capital Management sold off the biggest stake of all the hedgies monitored by Insider Monkey, comprising close to $4.2 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund sold off about $2.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Bloomin’ Brands Inc (NASDAQ:BLMN). We will take a look at Brooge Energy Limited (NASDAQ:BROG), INMODE LTD. (NASDAQ:INMD), Domo Inc. (NASDAQ:DOMO), PGT Innovations Inc. (NYSE:PGTI), The RMR Group Inc. (NASDAQ:RMR), S & T Bancorp Inc (NASDAQ:STBA), and Construction Partners, Inc. (NASDAQ:ROAD). This group of stocks’ market values resemble BLMN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BROG 6 32240 -1
INMD 11 63342 0
DOMO 21 227533 6
PGTI 11 71619 -3
RMR 14 79825 0
STBA 6 6558 2
ROAD 10 28756 4
Average 11.3 72839 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $137 million in BLMN’s case. Domo Inc. (NASDAQ:DOMO) is the most popular stock in this table. On the other hand Brooge Energy Limited (NASDAQ:BROG) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Bloomin’ Brands Inc (NASDAQ:BLMN) is more popular among hedge funds. Our overall hedge fund sentiment score for BLMN is 77. 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 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 returned 24.8% in 2020 through the end of September but still managed to beat the market by 19.3 percentage points. Hedge funds were also right about betting on BLMN as the stock returned 43.2% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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