Do Hedge Funds Love BJ’s Restaurants, Inc. (BJRI)?

Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and October 30th. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We had been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in the major indices. In this article, we will take a closer look at hedge fund sentiment towards BJ’s Restaurants, Inc. (NASDAQ:BJRI).

Is BJ’s Restaurants, Inc. (NASDAQ:BJRI) a great stock to buy now? Investors who are in the know are betting on the stock. The number of long hedge fund bets inched up by 1 lately. At the end of this article, we will also compare BJ’s Restaurants, Inc. (NASDAQ:BJRI) to other stocks, including Sturm, Ruger & Company (NYSE:RGR), Forum Energy Technologies Inc (NYSE:FET), and Forward Pharma A/S (NASDAQ:FWP) to get a better sense of its popularity.

Today there are plenty of gauges stock traders put to use to appraise publicly traded companies. A pair of the most underrated gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the S&P 500 by a solid amount (see the details here).

Keeping this in mind, let’s take a look at the recent action surrounding BJ’s Restaurants, Inc. (NASDAQ:BJRI).

How are hedge funds trading BJ’s Restaurants, Inc. (NASDAQ:BJRI)?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 7% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Christian Leone’s Luxor Capital Group has the biggest position in BJ’s Restaurants, Inc. (NASDAQ:BJRI), worth close to $107.7 million, comprising 2.5% of its total 13F portfolio. Coming in second is John Overdeck and David Siegel of Two Sigma Advisors, with a $12.2 million position; 0.1% of its 13F portfolio is allocated to the company. Hedge funds and other institutional investors with similar optimism consist of Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Adam Wright and Gary Kohler’s Blue Clay Capital.

Now, specific money managers have jumped into BJ’s Restaurants, Inc. (NASDAQ:BJRI) headfirst. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in BJ’s Restaurants, Inc. (NASDAQ:BJRI), having reported a $1.4 million investment in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Chao Ku’s Nine Chapters Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s now review hedge fund activity in other stocks similar to BJ’s Restaurants, Inc. (NASDAQ:BJRI). We will take a look at Sturm, Ruger & Company (NYSE:RGR), Forum Energy Technologies Inc (NYSE:FET), Forward Pharma A/S (NASDAQ:FWP), and Insperity Inc (NYSE:NSP). This group of stocks’ market values resembles BJ’s Restaurants, Inc. (NASDAQ:BJRI)’s market value.

As you can see, these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. Insperity Inc (NYSE:NSP) was the most popular stock in this table, with the highest number of hedge fund holdings at 25, whereas Forward Pharma A/S (NASDAQ:FWP) was the least sought after stock, with 11 hedge fund holdings only. BJ’s Restaurants, Inc. (NASDAQ:BJRI) is not the most popular stock in this group, but hedge fund interest is still above average. Despite the increased hedge fund interest in BJ’s Restaurants, Inc. (NASDAQ:BJRI), we would target stocks that hedge funds are piling on. In this context, Insperity Inc (NYSE:NSP) outweighs other stocks under consideration, and might be worth a place in your portfolio.