Is Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) has seen an increase in hedge fund sentiment lately. DFRG was in 14 hedge funds’ portfolios at the end of March. There were 13 hedge funds in our database with DFRG positions at the end of the previous quarter. Our calculations also showed that DFRG isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the fresh hedge fund action encompassing Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG).
What have hedge funds been doing with Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG)?
Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DFRG over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) was held by Armistice Capital, which reported holding $35.9 million worth of stock at the end of March. It was followed by Engaged Capital with a $21.3 million position. Other investors bullish on the company included Nokomis Capital, Antara Capital, and Highbridge Capital Management.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Nokomis Capital, managed by Brett Hendrickson, initiated the most valuable position in Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG). Nokomis Capital had $3.7 million invested in the company at the end of the quarter. Himanshu Gulati’s Antara Capital also initiated a $3.5 million position during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management, Himanshu Gulati’s Antara Capital, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG). We will take a look at Nemaura Medical Inc. (NASDAQ:NMRD), Leju Holdings Ltd (NYSE:LEJU), RGC Resources, Inc. (NASDAQ:RGCO), and 22nd Century Group, Inc (NYSE:XXII). This group of stocks’ market values match DFRG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NMRD | 1 | 36 | 1 |
| LEJU | 2 | 1888 | 0 |
| RGCO | 1 | 416 | 0 |
| XXII | 2 | 359 | -3 |
| Average | 1.5 | 675 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $81 million in DFRG’s case. Leju Holdings Ltd (NYSE:LEJU) is the most popular stock in this table. On the other hand Nemaura Medical Inc. (NASDAQ:NMRD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on DFRG, though not to the same extent, as the stock returned 5.8% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
