At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards BJ’s Restaurants, Inc. (NASDAQ:BJRI) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Is BJ’s Restaurants, Inc. (NASDAQ:BJRI) a healthy stock for your portfolio? The best stock pickers were getting less bullish. The number of long hedge fund positions went down by 3 lately. Our calculations also showed that BJRI 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). BJRI was in 13 hedge funds’ portfolios at the end of the first quarter of 2020. There were 16 hedge funds in our database with BJRI 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 market participants, hedge funds are perceived as unimportant, old investment tools of years past. While there are more than 8000 funds trading at the moment, Our experts hone in on the masters of this club, around 850 funds. It is estimated that this group of investors watch over bulk of the smart money’s total capital, and by keeping track of their finest equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy surpassed 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 .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 states that pay the most federal taxes to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the latest hedge fund action surrounding BJ’s Restaurants, Inc. (NASDAQ:BJRI).
What have hedge funds been doing with BJ’s Restaurants, Inc. (NASDAQ:BJRI)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in BJRI over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Balyasny Asset Management, managed by Dmitry Balyasny, holds the number one position in BJ’s Restaurants, Inc. (NASDAQ:BJRI). Balyasny Asset Management has a $2.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish include Christian Leone’s Luxor Capital Group, Frederick Tucker Golden’s Solas Capital Management and Peter Muller’s PDT Partners. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to BJ’s Restaurants, Inc. (NASDAQ:BJRI), around 1.77% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, setting aside 0.51 percent of its 13F equity portfolio to BJRI.
Because BJ’s Restaurants, Inc. (NASDAQ:BJRI) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies who sold off their positions entirely last quarter. At the top of the heap, Israel Englander’s Millennium Management sold off the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $32.5 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dropped its stock, about $1.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to BJ’s Restaurants, Inc. (NASDAQ:BJRI). We will take a look at McEwen Mining Inc (NYSE:MUX), Sterling Construction Company, Inc. (NASDAQ:STRL), Mersana Therapeutics, Inc. (NASDAQ:MRSN), and Aurora Mobile Limited (NASDAQ:JG). This group of stocks’ market values are closest to BJRI’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $14 million in BJRI’s case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand Aurora Mobile Limited (NASDAQ:JG) is the least popular one with only 1 bullish hedge fund positions. BJ’s Restaurants, Inc. (NASDAQ:BJRI) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on BJRI as the stock returned 50.8% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.