Do Hedge Funds Love Popeyes Louisiana Kitchen Inc (PLKI)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI).

Hedge fund interest in Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PLKI to other stocks including BancFirst Corporation (NASDAQ:BANF), First Bancorp (NYSE:FBP), and Installed Building Products Inc (NYSE:IBP) 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.

Pikoso.kz/Shutterstock.com

Now, we’re going to check out the fresh action surrounding Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI).

How have hedgies been trading Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI)?

Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PLKI over the last five quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Gregory Bylinsky and Jefferson Gramm’s Bandera Partners has the largest position in Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI), worth close to $26.8 million, accounting for 17.6% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, one of the largest hedge funds in the world, with a $21.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions contain Mark Broach’s Manatuck Hill Partners, Steve Cohen’s Point72 Asset Management, and John Overdeck and David Siegel’s Two Sigma Advisors. 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.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. Interestingly, Gabriel Plotkin’s Melvin Capital Management said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, worth about $17.8 million in stock, and Alexander Captain’s Cat Rock Capital was right behind this move, as the fund dropped about $13.1 million worth of shares.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI) but similarly valued. We will take a look at BancFirst Corporation (NASDAQ:BANF), First Bancorp (NYSE:FBP), Installed Building Products Inc (NYSE:IBP), and Amerisafe, Inc. (NASDAQ:AMSF). This group of stocks’ market values match PLKI’s market value.

As you can see these stocks had an average of 12 funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $87 million in PLKI’s case. First Bancorp (NYSE:FBP) is the most popular stock in this table. On the other hand BancFirst Corporation (NASDAQ:BANF) is the least popular one with only eight bullish hedge fund positions. Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI) 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 FBP might be a better candidate to consider taking a long position in.

Disclosure: none