Is CHUY A Good Stock To Buy Now?

Is Chuy’s Holdings Inc (NASDAQ:CHUY) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is CHUY a good stock to buy now? Investors who are in the know were becoming less hopeful. The number of bullish hedge fund bets decreased by 2 recently. Chuy’s Holdings Inc (NASDAQ:CHUY) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 18. Our calculations also showed that CHUY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most investors, hedge funds are assumed to be worthless, old financial vehicles of years past. While there are greater than 8000 funds in operation at the moment, Our experts choose to focus on the top tier of this group, approximately 850 funds. These hedge fund managers watch over most of the smart money’s total asset base, and by following their best stock picks, Insider Monkey has unsheathed a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 we’re going to take a look at the fresh hedge fund action regarding Chuy’s Holdings Inc (NASDAQ:CHUY).

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

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in CHUY a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CHUY A Good Stock To Buy?

The largest stake in Chuy’s Holdings Inc (NASDAQ:CHUY) was held by Royce & Associates, which reported holding $9.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $6.5 million position. Other investors bullish on the company included D E Shaw, Arrowstreet Capital, and Prescott Group Capital Management. In terms of the portfolio weights assigned to each position Empirical Capital Partners allocated the biggest weight to Chuy’s Holdings Inc (NASDAQ:CHUY), around 2.27% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, setting aside 1.42 percent of its 13F equity portfolio to CHUY.

Due to the fact that Chuy’s Holdings Inc (NASDAQ:CHUY) has faced bearish sentiment from the smart money, we can see that there was a specific group of hedge funds that slashed their positions entirely heading into Q4. Interestingly, Josh Donfeld and David Rogers’s Castle Hook Partners cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $1.9 million in stock. Constantinos J. Christofilis’s fund, Archon Capital Management, also dropped its stock, about $1.8 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chuy’s Holdings Inc (NASDAQ:CHUY) but similarly valued. We will take a look at Athersys, Inc. (NASDAQ:ATHX), Immunic, Inc. (NASDAQ:IMUX), Ducommun Incorporated (NYSE:DCO), Barings BDC, Inc. (NYSE:BBDC), Central Pacific Financial Corp. (NYSE:CPF), CHP Merger Corp. (NASDAQ:CHPM), and Pzena Investment Management Inc (NYSE:PZN). This group of stocks’ market caps match CHUY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATHX 6 2425 -4
IMUX 8 23977 -1
DCO 9 36746 1
BBDC 9 21050 1
CPF 14 42376 -2
CHPM 16 100935 16
PZN 4 5821 -2
Average 9.4 33333 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $33 million in CHUY’s case. CHP Merger Corp. (NASDAQ:CHPM) is the most popular stock in this table. On the other hand Pzena Investment Management Inc (NYSE:PZN) is the least popular one with only 4 bullish hedge fund positions. Chuy’s Holdings Inc (NASDAQ:CHUY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHUY is 68. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on CHUY as the stock returned 30.8% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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