Hedge Funds Aren’t Crazy About Papa John’s Int’l, Inc. (PZZA) Anymore

Is Papa John’s Int’l, Inc. (NASDAQ:PZZA) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Papa John’s Int’l, Inc. (NASDAQ:PZZA) has experienced a slight decrease in hedge fund sentiment of late. PZZA was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. There were 13 hedge funds in our database with PZZA holdings 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 AMEC Foster Wheeler PLC (NYSE:AMCBF), Fossil Inc (NASDAQ:FOSL), and Communications Sales & Leasing Inc (NASDAQ:CSAL) to gather more data points.

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At the moment there are many gauges shareholders put to use to assess publicly traded companies. A duo of the best gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the best money managers can trounce the S&P 500 by a very impressive margin (see the details here).

With all of this in mind, we’re going to take a gander at the key action regarding Papa John’s Int’l, Inc. (NASDAQ:PZZA).

What does the smart money think about Papa John’s Int’l, Inc. (NASDAQ:PZZA)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the largest position in Papa John’s Int’l, Inc. (NASDAQ:PZZA), worth close to $77.4 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Marshall Wace LLP, managed by Paul Marshall and Ian Wace, which holds a $12.1 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.

Seeing as Papa John’s Int’l, Inc. (NASDAQ:PZZA) has experienced a bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of money managers who were dropping their entire stakes last quarter. At the top of the heap, Gabriel Plotkin’s Melvin Capital Management said goodbye to the biggest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $11.3 million in stock.

Let’s go over hedge fund activity in other stocks similar to Papa John’s Int’l, Inc. (NASDAQ:PZZA). These stocks are AMEC Foster Wheeler PLC (NYSE:AMCBF), Fossil Inc (NASDAQ:FOSL), Communications Sales & Leasing Inc (NASDAQ:CSAL), and Central Fund of Canada Limited (USA) (NYSEAMEX:CEF). This group of stocks’ market caps are similar to PZZA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMCBF 5 63046 1
FOSL 29 472602 -4
CSAL 13 124563 -2
CEF 4 11351 1

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $114 million in PZZA’s case. Fossil Inc (NASDAQ:FOSL) is the most popular stock in this table. On the other hand Central Fund of Canada Limited (USA) (NYSEAMEX:CEF) is the least popular one with only 4 bullish hedge fund positions. Papa John’s Int’l, Inc. (NASDAQ:PZZA) 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.