Bojangles Inc (BOJA): Are Hedge Funds Right About This Stock?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

One stock that registered an increase in popularity among smart money investors tracked by Insider Monkey last quarter is Bojangles Inc (NASDAQ:BOJA), in which 10 funds held shares at the end of September. At the end of this article we will also compare BOJA to other stocks including Regis Corporation (NYSE:RGS), Rayonier Advanced Materials Inc (NYSE:RYAM), and Intralinks Holdings Inc (NYSE:IL) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, we’re going to take a look at the latest action surrounding Bojangles Inc (NASDAQ:BOJA).

Hedge fund activity in Bojangles Inc (NASDAQ:BOJA)

At the end of the third quarter, 10 funds tracked by Insider Monkey held long positions in this stock, up by 43% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in BOJA heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Steve Cohen’s Point72 Asset Management has the number one position in Bojangles Inc (NASDAQ:BOJA), worth close to $3.8 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Skylands Capital, led by Charles Paquelet, which holds a $2.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Joel Greenblatt’s Gotham Asset Management and Renaissance Technologies, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Ken Griffin’s Citadel Investment Group initiated a $1.2 million position during the third quarter. The other funds with brand new BOJA positions are Neil Chriss’ Hutchin Hill Capital and Mike Vranos’ Ellington.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Bojangles Inc (NASDAQ:BOJA) but similarly valued. These stocks are Regis Corporation (NYSE:RGS), Rayonier Advanced Materials Inc (NYSE:RYAM), Intralinks Holdings Inc (NYSE:IL), and Alon USA Energy, Inc. (NYSE:ALJ). All of these stocks’ market caps match BOJA’s market cap.

As you can see these stocks had an average of 19 investors with bullish positions and the average amount invested in these stocks was $128 million. That figure was just $12 million in BOJA’s case. Rayonier Advanced Materials Inc (NYSE:RYAM) is the most popular stock in this table, while Regis Corporation (NYSE:RGS) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Bojangles Inc (NASDAQ:BOJA) is even less popular than RGS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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