Here’s What Smart Money Thinks about Papa Murphy’s Holdings Inc (FRSH)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Papa Murphy’s Holdings Inc (NASDAQ:FRSH).

Is Papa Murphy’s Holdings Inc (NASDAQ:FRSH) a great investment now? It looks like investors who are in the know are taking a bullish view. The number of long hedge fund positions among investors in our database went up by two last quarter. At the end of this article we will also compare FRSH to other stocks including Consumer Portfolio Services, Inc. (NASDAQ:CPSS), Timberland Bancorp, Inc. (NASDAQ:TSBK), and Atlantic Alliance Partnership Corp (NASDAQ:AAPC) 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.

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Keeping this in mind, let’s take a look at the key action surrounding Papa Murphy’s Holdings Inc (NASDAQ:FRSH).

How are hedge funds trading Papa Murphy’s Holdings Inc (NASDAQ:FRSH)?

At Q3’s end, a total of seven of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 40% from the second quarter of 2016. On the other hand, there were a total of seven funds with a bullish position in FRSH at the beginning of this year. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Joel Ramin’s 12 West Capital Management holds the largest position in Papa Murphy’s Holdings Inc (NASDAQ:FRSH). 12 West Capital Management has a $6.9 million position in the stock, comprising 1% of its 13F portfolio. The second most bullish fund manager is Constantinos J. Christofilis’ Archon Capital Management holding a $2.6 million position; the fund has 6.5% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Israel Englander’s Millennium Management, which is one of the 10 largest hedge funds in the world, and James A. Mitarotonda’s Barington Capital Group. 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.

Now, key money managers have been driving this bullishness. Marc Majzner’s Clearline Capital assembled the largest position in Papa Murphy’s Holdings Inc (NASDAQ:FRSH). Clearline Capital had $0.5 million invested in the company at the end of the quarter. Barington Capital Group also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is D. E. Shaw’s D E Shaw.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Papa Murphy’s Holdings Inc (NASDAQ:FRSH) but similarly valued. These stocks are Consumer Portfolio Services, Inc. (NASDAQ:CPSS), Timberland Bancorp, Inc. (NASDAQ:TSBK), Atlantic Alliance Partnership Corp (NASDAQ:AAPC), and Gaiam, Inc. (NASDAQ:GAIA). This group of stocks’ market valuations are similar to FRSH’s market valuation.

As you can see these stocks had an average of five funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $10 million in FRSH’s case. Consumer Portfolio Services, Inc. (NASDAQ:CPSS) is the most popular stock in this table. On the other hand Atlantic Alliance Partnership Corp (NASDAQ:AAPC) is the least popular one with only four bullish hedge fund positions. Compared to these stocks Papa Murphy’s Holdings Inc (NASDAQ:FRSH) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None