Hedge Funds Aren’t Crazy About Biglari Holdings Inc (BH) Anymore

Is Biglari Holdings Inc (NYSE:BH) a buy right now? Investors who are in the know are becoming less confident. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience

According to most investors, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we at Insider Monkey hone in on the moguls of this group, around 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total capital, and by tracking their top stock picks, we have unsheathed a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as beneficial, bullish insider trading activity is another way to break down the financial markets. Obviously, there are a number of incentives for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if investors understand where to look (learn more here).

Keeping this in mind, let’s take a peek at the key action surrounding Biglari Holdings Inc (NYSE:BH).

What does the smart money think about Biglari Holdings Inc (NYSE:BH)?

Heading into Q2, a total of 8 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly.

When looking at the hedgies we track, GAMCO Investors, managed by Mario Gabelli, holds the most valuable position in Biglari Holdings Inc (NYSE:BH). GAMCO Investors has a $39.7 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $5.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

Judging by the fact that Biglari Holdings Inc (NYSE:BH) has experienced bearish sentiment from the smart money, logic holds that there was a specific group of money managers who were dropping their full holdings last quarter. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management dumped the biggest position of the 450+ funds we watch, comprising close to $1.1 million in stock.. Paul Tudor Jones’s fund, Tudor Investment Corp, also cut its stock, about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Biglari Holdings Inc (NYSE:BH)?

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past six months. Over the last 180-day time period, Biglari Holdings Inc (NYSE:BH) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Biglari Holdings Inc (NYSE:BH). These stocks are Fiesta Restaurant Group Inc (NASDAQ:FRGI), Ruby Tuesday, Inc. (NYSE:RT), CEC Entertainment, Inc. (NYSE:CEC), Chuy’s Holdings Inc (NASDAQ:CHUY), and Denny’s Corporation (NASDAQ:DENN). This group of stocks belong to the restaurants industry and their market caps resemble BH’s market cap.

With the returns exhibited by Insider Monkey’s studies, everyday investors should always watch hedge fund and insider trading sentiment, and Biglari Holdings Inc (NYSE:BH) is an important part of this process.

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