Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) was in 22 hedge funds’ portfolios at the end of the third quarter of 2016. CBRL shareholders have witnessed an increase in support from the world’s most elite money managers lately. There were 15 hedge funds in our database with CBRL positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Olin Corporation (NYSE:OLN), IDACORP Inc (NYSE:IDA), and Advanced Micro Devices, Inc. (NYSE:AMD) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What does the smart money think about Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a 47% surge from the previous quarter, as smart money ownership of the stock hits a yearly high. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). Renaissance Technologies has a $33.5 million position in the stock. On Renaissance Technologies’ heels is AQR Capital Management, managed by Cliff Asness, which holds a $28.1 million position. Other peers that are bullish comprise George Hall’s Clinton Group, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors and Israel Englander’s Millennium Management.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Clinton Group initiated the most outsized position in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). Clinton Group had $14.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $9.4 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Daniel S. Och’s OZ Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) but similarly valued. We will take a look at Olin Corporation (NYSE:OLN), IDACORP Inc (NYSE:IDA), Advanced Micro Devices, Inc. (NYSE:AMD), and Lincoln Electric Holdings, Inc. (NASDAQ:LECO). This group of stocks’ market values resemble CBRL’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $491 million. That figure was $127 million in CBRL’s case. Advanced Micro Devices, Inc. (NYSE:AMD) is the most popular stock in this table. On the other hand IDACORP Inc (NYSE:IDA) is the least popular one with only 6 bullish hedge fund positions. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AMD might be a better candidate to consider a long position in, though CBRL is also worth monitoring.