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Hedge Funds Aren’t Crazy About Build-A-Bear Workshop, Inc (BBW) Anymore

We, at Insider Monkey, have gone over 700 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article, we look at what those investors think of Build-A-Bear Workshop, Inc (NYSE:BBW).

Build-A-Bear Workshop, Inc (NYSE:BBW) shareholders have witnessed a decrease in hedge fund interest lately. 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 Ecopetrol S.A. (ADR) (NYSE:EC), EZCORP Inc (NASDAQ:EZPW), and Flexion Therapeutics Inc (NASDAQ:FLXN) to gather more data points.

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According to most stock holders, hedge funds are seen as worthless, old investment tools of years past. While there are more than 8000 funds in operation at present, Our researchers hone in on the crème de la crème of this group, around 700 funds. It is estimated that this group of investors commands the lion’s share of the smart money’s total capital, and by tracking their first-class investments, Insider Monkey has spotted a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, let’s view the latest action encompassing Build-A-Bear Workshop, Inc (NYSE:BBW).

What have hedge funds been doing with Build-A-Bear Workshop, Inc (NYSE:BBW)?

At the end of Q3, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 6% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cannell Capital, managed by J. Carlo Cannell, holds the number one position in Build-A-Bear Workshop, Inc (NYSE:BBW). Cannell Capital has a $16 million position in the stock, comprising 6% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $10.9 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Brian C. Freckmann’s Lyon Street Capital, Cliff Asness’ AQR Capital Management, and Mark Broach’s Manatuck Hill Partners.

Due to the fact that Build-A-Bear Workshop, Inc (NYSE:BBW) has faced falling interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds that decided to sell off their full holdings last quarter. Interestingly, Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the biggest stake of the 700 funds followed by Insider Monkey, valued at an estimated $0.4 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund cut about $0.3 million worth of shares. These transactions are important to note, as aggregate hedge fund interest was cut by 1 fund last quarter.

Let’s now review hedge fund activity in other stocks similar to Build-A-Bear Workshop, Inc (NYSE:BBW). These stocks are Ecopetrol S.A. (ADR) (NYSE:EC), EZCORP Inc (NASDAQ:EZPW), Flexion Therapeutics Inc (NASDAQ:FLXN), and Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI). All of these stocks’ market caps resemble Build-A-Bear Workshop, Inc (NYSE:BBW)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EC 6 36169 2
EZPW 17 68103 -4
FLXN 10 36547 2
HYI 4 34278 0

As you can see, these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $54 million in Build-A-Bear Workshop, Inc (NYSE:BBW)’s case. EZCORP Inc (NASDAQ:EZPW) is the most popular stock in this table. On the other hand, Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI) is the least popular one with only 4 bullish hedge fund positions. Build-A-Bear Workshop, Inc (NYSE:BBW) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, EZCORP Inc (NASDAQ:EZPW) might be a better candidate to consider a long position.

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