Hedge Funds Are Buying BBQ Holdings, Inc. (BBQ)

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 third 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 4 years and analyze what the smart money thinks of BBQ Holdings, Inc. (NASDAQ:BBQ) based on that data.

BBQ Holdings, Inc. (NASDAQ:BBQ) has experienced an increase in hedge fund interest in recent months. Our calculations also showed that BBQ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Charles Davidson - Wexford Capital

Charles Davidson of Wexford Capital

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to check out the latest hedge fund action surrounding BBQ Holdings, Inc. (NASDAQ:BBQ).

What does smart money think about BBQ Holdings, Inc. (NASDAQ:BBQ)?

Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in BBQ a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Charles Davidson and Joseph Jacobs’s Wexford Capital has the most valuable position in BBQ Holdings, Inc. (NASDAQ:BBQ), worth close to $8.2 million, comprising 1.1% of its total 13F portfolio. The second largest stake is held by Gregory Bylinsky and Jefferson Gramm of Bandera Partners, with a $7.1 million position; 4.4% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish consist of Renaissance Technologies, Bryant Regan’s Lafitte Capital Management and . In terms of the portfolio weights assigned to each position Bandera Partners allocated the biggest weight to BBQ Holdings, Inc. (NASDAQ:BBQ), around 4.45% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, setting aside 1.15 percent of its 13F equity portfolio to BBQ.

As industrywide interest jumped, specific money managers were breaking ground themselves. Wexford Capital, managed by Charles Davidson and Joseph Jacobs, established the largest position in BBQ Holdings, Inc. (NASDAQ:BBQ). Wexford Capital had $8.2 million invested in the company at the end of the quarter. Gregory Bylinsky and Jefferson Gramm’s Bandera Partners also initiated a $7.1 million position during the quarter. The other funds with brand new BBQ positions are Renaissance Technologies and Bryant Regan’s Lafitte Capital Management.

Let’s check out hedge fund activity in other stocks similar to BBQ Holdings, Inc. (NASDAQ:BBQ). We will take a look at ICC Holdings, Inc. (NASDAQ:ICCH), Pintec Technology Holdings Limited (NASDAQ:PT), Rekor Systems, Inc. (NASDAQ:REKR), and StoneMor Partners L.P. (NYSE:STON). This group of stocks’ market caps match BBQ’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ICCH 3 1303 0
PT 1 17 0
REKR 1 46 0
STON 2 13571 0
Average 1.75 3734 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.75 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $18 million in BBQ’s case. ICC Holdings, Inc. (NASDAQ:ICCH) is the most popular stock in this table. On the other hand Pintec Technology Holdings Limited (NASDAQ:PT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks BBQ Holdings, Inc. (NASDAQ:BBQ) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BBQ wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BBQ were disappointed as the stock returned -3.1% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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