BJ’s Restaurants, Inc. (BJRI): Are Hedge Funds Right About This Stock?

BJ’s Restaurants, Inc. (NASDAQ:BJRI) was in 5 hedge funds’ portfolio at the end of the fourth quarter of 2012. BJRI investors should be aware of an increase in hedge fund interest of late. There were 2 hedge funds in our database with BJRI positions at the end of the previous quarter.

If you’d ask most shareholders, hedge funds are perceived as slow, outdated financial vehicles of years past. While there are greater than 8000 funds in operation at the moment, we hone in on the masters of this club, close to 450 funds. It is estimated that this group has its hands on most of the hedge fund industry’s total asset base, and by watching their highest performing picks, we have figured out a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as key, optimistic insider trading activity is another way to break down the world of equities. As the old adage goes: there are plenty of stimuli for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this strategy if investors understand where to look (learn more here).

Keeping this in mind, it’s important to take a gander at the key action encompassing BJ’s Restaurants, Inc. (NASDAQ:BJRI).

Hedge fund activity in BJ’s Restaurants, Inc. (NASDAQ:BJRI)

Heading into 2013, a total of 5 of the hedge funds we track were long in this stock, a change of 150% from the third quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Bluefin Investment Management, managed by Scott Burney, holds the largest position in BJ’s Restaurants, Inc. (NASDAQ:BJRI). Bluefin Investment Management has a $4.8 million position in the stock, comprising 1.9% of its 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $2.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Bluefin Investment Management, managed by Scott Burney, created the biggest position in BJ’s Restaurants, Inc. (NASDAQ:BJRI). Bluefin Investment Management had 4.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.6 million investment in the stock during the quarter. The only other fund with a new position in the stock is John Overdeck and David Siegel’s Two Sigma Advisors.

What do corporate executives and insiders think about BJ’s Restaurants, Inc. (NASDAQ:BJRI)?

Insider buying is best served when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time period, BJ’s Restaurants, Inc. (NASDAQ:BJRI) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to BJ’s Restaurants, Inc. (NASDAQ:BJRI). These stocks are DineEquity Inc (NYSE:DIN), Sonic Corporation (NASDAQ:SONC), Bob Evans Farms Inc (NASDAQ:BOBE), AFC Enterprises, Inc. (NASDAQ:AFCE), and Krispy Kreme Doughnuts (NYSE:KKD). All of these stocks are in the restaurants industry and their market caps resemble BJRI’s market cap.

With the results shown by our strategies, everyday investors should always watch hedge fund and insider trading activity, and BJ’s Restaurants, Inc. (NASDAQ:BJRI) applies perfectly to this mantra.

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