Should You Follow the Smart Money to Barnes & Noble, Inc. (BKS)’s Exit?

Due to the fact that Barnes & Noble, Inc. (NYSE:BKS) has witnessed falling interest from the smart money, logic holds that there exists a select few funds that elected to cut their positions entirely last quarter. Interestingly, Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management got rid of the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling about $1.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its call options, about $0.9 million worth.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Barnes & Noble, Inc. (NYSE:BKS) but similarly valued. We will take a look at Cavco Industries, Inc. (NASDAQ:CVCO), 1st Source Corporation (NASDAQ:SRCE), Finish Line Inc (NASDAQ:FINL), and Biglari Holdings Inc (NYSE:BH). This group of stocks’ market valuations are closest to BKS’s market valuation.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $154 million in the case of BKS. Finish Line Inc (NASDAQ:FINL) is the most popular stock in this table. On the other hand Biglari Holdings Inc (NYSE:BH) is the least popular one with only 5 bullish hedge fund positions. Barnes & Noble, Inc. (NYSE:BKS) 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 FINL might be a better candidate to consider taking a long position in.

Disclosure: None