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Did Hedge Funds Make The Right Call On Cracker Barrel Old Country Store, Inc. (CBRL)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtCracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) a good investment right now? Prominent investors were selling. The number of bullish hedge fund bets fell by 1 recently. Our calculations also showed that CBRL 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). CBRL was in 23 hedge funds’ portfolios at the end of the first quarter of 2020. There were 24 hedge funds in our database with CBRL holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most traders, hedge funds are viewed as unimportant, old investment tools of yesteryear. While there are greater than 8000 funds trading at the moment, Our researchers look at the top tier of this group, about 850 funds. These money managers orchestrate bulk of the smart money’s total capital, and by tracking their first-class stock picks, Insider Monkey has uncovered a number of investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Blair Levinsky of Waratah Capital Advisors

Blair Levinsky of Waratah Capital Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL).

How have hedgies been trading Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL)?

At the end of the first quarter, 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 CBRL over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), which was worth $29.2 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $24.4 million worth of shares. Two Sigma Advisors, PEAK6 Capital Management, and Millennium Management 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 Waratah Capital Advisors allocated the biggest weight to Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), around 1.12% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, earmarking 0.58 percent of its 13F equity portfolio to CBRL.

Seeing as Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) has faced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of funds that elected to cut their full holdings by the end of the first quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest investment of the 750 funds watched by Insider Monkey, worth close to $17.5 million in stock. Noam Gottesman’s fund, GLG Partners, also said goodbye to its stock, about $12.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). We will take a look at Home Bancshares Inc (Conway, AR) (NASDAQ:HOMB), National Beverage Corp. (NASDAQ:FIZZ), Stepan Company (NYSE:SCL), and BancorpSouth Bank (NYSE:BXS). This group of stocks’ market values are similar to CBRL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HOMB 20 15614 8
FIZZ 20 202468 -1
SCL 10 48020 -3
BXS 15 36662 1
Average 16.25 75691 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $101 million in CBRL’s case. Home Bancshares Inc (Conway, AR) (NASDAQ:HOMB) is the most popular stock in this table. On the other hand Stepan Company (NYSE:SCL) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is more popular among hedge funds. 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 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on CBRL as the stock returned 35.3% in Q2 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.