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Is Del Frisco’s Restaurant Group Inc (DFRG) A Good Stock To Buy?

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 30th. In this article, we look at what those funds think of Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) based on that data.

food, restaurant, meal, serving,


Is Del Frisco’s Restaurant Group Inc a bargain? The smart money is actually taking an optimistic view. The number of bullish hedge fund bets went up by 6 recently. At the end of this article we will also compare DFRG to other stocks including Hampton Roads Bankshares, Inc. (NASDAQ:HMPR), Arbor Realty Trust, Inc. (NYSE:ABR), and Parker Drilling Company (NYSE:PKD) to get a better sense of its popularity.

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At the moment there are plenty of formulas stock market investors can use to value their stock investments. A duo of the less known formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outpace the broader indices by a solid margin (see the details here). That’s why we like analyzing hedge fund interest and use it as a starting point in our investment process.

Now, we’re going to take a look at the fresh action encompassing Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG).

What does the smart money think about Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG)?

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long in this stock, a change of 35% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies followed by Insider Monkey, Melvin Capital Management, managed by Gabriel Plotkin, holds the biggest position in Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG). Melvin Capital Management has a $20.1 million position in the stock, comprising 1.1% of its 13F portfolio. Sitting at the No. 2 spot is Cardinal Capital, led by Amy Minella, holding a $17.1 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Matthew Knauer and Mina Faltas’s Nokota Management, Steven Boyd’s Armistice Capital and Constantinos J. Christofilis’s Archon Capital Management.

As aggregate interest increased, some big names have been driving this bullishness. Armistice Capital, managed by Steven Boyd, initiated the largest position in Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG). Armistice Capital had $5.9 million invested in the company at the end of the quarter. Constantinos J. Christofilis’s Archon Capital Management also made a $3.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Steve Cohen’s Point72 Asset Management, and Chuck Royce’s Royce & Associates.

Let’s also examine hedge fund activity in other stocks similar to Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG). We will take a look at Hampton Roads Bankshares, Inc. (NASDAQ:HMPR), Arbor Realty Trust, Inc. (NYSE:ABR), Parker Drilling Company (NYSE:PKD), and Medifast, Inc. (NYSE:MED). This group of stocks’ market values are closest to DFRG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HMPR 6 106038 0
ABR 9 8294 -1
PKD 9 3097 -3
MED 14 95101 -2

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. Medifast, Inc. (NYSE:MED) is the most popular stock in this table. On the other hand Hampton Roads Bankshares, Inc. (NASDAQ:HMPR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) is more popular among hedge funds. Collectively hedge funds owned more than a quarter of the stock’s outstanding shares. Considering that hedge funds are fond of this stock and new hedge funds were snapping up its shares, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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