Is CBRL Stock A Buy or Sell?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL)? The smart money sentiment can provide an answer to this question.

Is CBRL stock a buy? Investors who are in the know were taking a pessimistic view. The number of long hedge fund positions fell by 3 lately. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 29. Our calculations also showed that CBRL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 29 hedge funds in our database with CBRL positions at the end of the third quarter.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a peek at the key hedge fund action regarding Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL).

Do Hedge Funds Think CBRL Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in CBRL a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) was held by Melvin Capital Management, which reported holding $49.5 million worth of stock at the end of December. It was followed by GLG Partners with a $14.4 million position. Other investors bullish on the company included AQR Capital Management, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Sciencast Management allocated the biggest weight to Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), around 0.36% of its 13F portfolio. Melvin Capital Management is also relatively very bullish on the stock, earmarking 0.22 percent of its 13F equity portfolio to CBRL.

Because Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) has faced falling interest from hedge fund managers, we can see that there exists a select few hedge funds who sold off their entire stakes by the end of the fourth quarter. At the top of the heap, Robert Joseph Caruso’s Select Equity Group said goodbye to the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $43 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $30.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds by the end of the fourth quarter.

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. These stocks are Prelude Therapeutics Incorporated (NASDAQ:PRLD), Ingevity Corporation (NYSE:NGVT), Sensient Technologies Corporation (NYSE:SXT), Insperity Inc (NYSE:NSP), Meritage Homes Corp (NYSE:MTH), Kirby Corporation (NYSE:KEX), and Focus Financial Partners Inc. (NASDAQ:FOCS). All of these stocks’ market caps are similar to CBRL’s market cap.

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As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $505 million. That figure was $135 million in CBRL’s case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand Prelude Therapeutics Incorporated (NASDAQ:PRLD) is the least popular one with only 8 bullish hedge fund positions. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CBRL is 69.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on CBRL as the stock returned 31.7% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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