Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Del Taco Restaurants Inc (NASDAQ:TACO) to find out whether it was one of their high conviction long-term ideas.
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Del Taco Restaurants Inc (NASDAQ:TACO) has seen an increase in hedge fund sentiment recently. At the end of this article we will also compare TACO to other stocks, including Agree Realty Corporation (NYSE:ADC), LGI Homes Inc (NASDAQ:LGIH), and WMIH Corp (OTCMKTS:WMIH) to get a better sense of its popularity.
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In the 21st century investor’s toolkit there are dozens of gauges shareholders put to use to grade publicly traded companies. A couple of the best gauges are hedge fund and insider trading sentiment. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the S&P 500 by a solid amount (see the details here).
Keeping this in mind, we’re going to go over the fresh action encompassing Del Taco Restaurants Inc (NASDAQ:TACO).
Hedge fund activity in Del Taco Restaurants Inc (NASDAQ:TACO)
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of 9% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings meaningfully.
According to Insider Monkey’s hedge fund database, Pleasant Lake Partners, managed by Jonathan Lennon, holds the number one position in Del Taco Restaurants Inc (NASDAQ:TACO). Pleasant Lake Partners has a $70.3 million position in the stock, comprising 37.4% of its 13F portfolio. The second most bullish hedge fund manager is Oskie Capital Management, managed by David M. Markowitz, which held a $12.8 million position; the fund has 7.3% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Jonathan Salinas’s Plymouth Lane Capital Management, Jonathan Salinas’s Plymouth Lane Capital Management and Charles Davidson’s Wexford Capital.
Consequently, key money managers were breaking ground themselves. Crestwood Capital Management, managed by Michael R. Weisberg, initiated the biggest position in Del Taco Restaurants Inc (NASDAQ:TACO). Crestwood Capital Management had $7.5 million invested in the company at the end of the quarter. Brad Farber’s Atika Capital also made a $2.4 million investment in the stock during the quarter. The other funds with brand new TACO positions are Paul Tudor Jones’s Tudor Investment Corp, Brian Taylor’s Pine River Capital Management, and Jonathan Salinas’s Plymouth Lane Capital Management.
Let’s go over hedge fund activity in other stocks similar to Del Taco Restaurants Inc (NASDAQ:TACO). We will take a look at Agree Realty Corporation (NYSE:ADC), LGI Homes Inc (NASDAQ:LGIH), WMIH Corp (OTCMKTS:WMIH), and Navios Maritime Acquisition Corp (NYSE:NNA). All of these stocks’ market caps match TACO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADC | 7 | 16159 | -4 |
| LGIH | 17 | 63702 | 11 |
| WMIH | 34 | 169118 | 30 |
| NNA | 11 | 10317 | -1 |
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. WMIH Corp (OTCMKTS:WMIH) is the most popular stock in this table and even though Del Taco Restaurants Inc (NASDAQ:TACO) is not the most popular stock in this group, the 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, WMIH might be a better candidate to consider a long position.
