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Hedge Fund Pleasant Lake Ups Its Position in Del Taco Restaurants Inc (TACO)

According to SEC filings, activist hedge fund Pleasant Lake Partners recently established a 4.46 million share position in the Del Taco Restaurants Inc (NASDAQ:TACO), good for 11.5% of the common shares. Pleasant Lake’s position in Del Taco Restaurants is a new position, as the hedge fund had no shares of Del Taco in the first quarter.

Besides Pleasant Lake’s recent purchase, other hedge funds have been bullish on Del Taco too. Of Del Taco’s top 10 institutional holders, eight established new positions, one upped its position, and one institution reduced its position by 52.4% in the first quarter. The second largest holder of Del Taco after Pleasant Lake is Moore Capital Management with 1,250,000 shares. Moore Capital upped its holdings by 150% from January to March 31. The third largest holder of Del Taco is Silver Rock Financial with 1 million shares. Silver Rock’s Del Taco position is a new position for the fund. Like Silver Rock, Oskie Capital Management, Wexford Capital Management, Davidson Kempner Capital Management, Boston Partners, Jet Capital Investors, and Claar Advisors all established new positions in the first quarter. Fir Tree is the only institution that reduced its position, having reduced its position by 52.4% to 706,800 shares.


Following hedge fund activity can generate alpha. Our research shows that the 15 most popular small-cap stocks among hedge funds have outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012, and they managed to return more than 144% over the ensuing 2.5+ years and outperformed the S&P 500 Index by over 84 percentage points.

Del Taco Restaurants Inc (NASDAQ:TACO) is a leading Mexican cuisine restaurant chain, with 304 company owned restaurants and 242 franchised restaurants. The company’s growth has been accelerating. Del Taco’s company owned restaurants has had 11 consecutive quarters of same store sales growth, with the company reporting 7.9% same store sales growth in Q1 2015 up from Q4’s 5.9% and Q1 2014’s 4.6%. In addition to same store sales growth, Del Taco will have significant unit growth in the future. Management estimates that there is an in-fill opportunity of over 400 company and franchised restaurants in established markets. With the Hispanic population in the U.S. growing quickly, the long run prospects for Del Taco to successfully expand beyond its established markets in the West coast are favorable too.

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