The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of El Pollo LoCo Holdings Inc (NASDAQ:LOCO).
El Pollo LoCo Holdings Inc (NASDAQ:LOCO) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. LOCO investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 10 hedge funds in our database with LOCO holdings at the end of June. Our calculations also showed that LOCO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are dozens of methods stock market investors can use to value stocks. A couple of the most under-the-radar methods are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best fund managers can outperform the market by a healthy amount (see the details here).
Richard Driehaus of Driehaus Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a gander at the new hedge fund action regarding El Pollo LoCo Holdings Inc (NASDAQ:LOCO).
How are hedge funds trading El Pollo LoCo Holdings Inc (NASDAQ:LOCO)?
At third quarter’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in LOCO over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Driehaus Capital held the most valuable stake in El Pollo LoCo Holdings Inc (NASDAQ:LOCO), which was worth $9.1 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $7.1 million worth of shares. Renaissance Technologies, Millennium Management, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to El Pollo LoCo Holdings Inc (NASDAQ:LOCO), around 0.19% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to LOCO.
Due to the fact that El Pollo LoCo Holdings Inc (NASDAQ:LOCO) has witnessed falling interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds that slashed their positions entirely last quarter. Interestingly, Matthew Hulsizer’s PEAK6 Capital Management said goodbye to the largest position of the “upper crust” of funds watched by Insider Monkey, comprising about $0.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $0.4 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as El Pollo LoCo Holdings Inc (NASDAQ:LOCO) but similarly valued. These stocks are Premier Financial Corp. (NASDAQ:PFC), America’s Car-Mart, Inc. (NASDAQ:CRMT), Cass Information Systems (NASDAQ:CASS), Celldex Therapeutics, Inc. (NASDAQ:CLDX), Natus Medical Inc (NASDAQ:NTUS), Unitil Corporation (NYSE:UTL), and Veeco Instruments Inc. (NASDAQ:VECO). This group of stocks’ market values are similar to LOCO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFC | 13 | 46734 | 3 |
| CRMT | 9 | 63653 | -5 |
| CASS | 5 | 11771 | -4 |
| CLDX | 23 | 292439 | 1 |
| NTUS | 24 | 72772 | 1 |
| UTL | 11 | 44842 | 2 |
| VECO | 19 | 290411 | -1 |
| Average | 14.9 | 117517 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $29 million in LOCO’s case. Natus Medical Inc (NASDAQ:NTUS) is the most popular stock in this table. On the other hand Cass Information Systems (NASDAQ:CASS) is the least popular one with only 5 bullish hedge fund positions. El Pollo LoCo Holdings Inc (NASDAQ:LOCO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LOCO is 25.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately LOCO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LOCO investors were disappointed as the stock returned -0.9% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow El Pollo Loco Holdings Inc. (NASDAQ:LOCO)
Follow El Pollo Loco Holdings Inc. (NASDAQ:LOCO)
Disclosure: None. This article was originally published at Insider Monkey.
