Is BBQ Holdings, Inc. (BBQ) A Good Stock To Buy?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards BBQ Holdings, Inc. (NASDAQ:BBQ).

Is BBQ a good stock to buy? BBQ Holdings, Inc. (NASDAQ:BBQ) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of March. Our calculations also showed that BBQ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Vaccinex, Inc. (NASDAQ:VCNX), AnPac Bio-Medical Science Co., Ltd. (NASDAQ:ANPC), and Borqs Technologies, Inc. (NASDAQ:BRQS) to gather more data points.

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Charles Davidson of Wexford Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a gander at the key hedge fund action surrounding BBQ Holdings, Inc. (NASDAQ:BBQ).

Do Hedge Funds Think BBQ Is A Good Stock To Buy Now?

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in BBQ a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Wexford Capital, managed by Charles Davidson and Joseph Jacobs, holds the most valuable position in BBQ Holdings, Inc. (NASDAQ:BBQ). Wexford Capital has a $12.2 million position in the stock, comprising 1.8% of its 13F portfolio. The second most bullish fund manager is Bandera Partners, led by Gregory Bylinsky and Jefferson Gramm, holding a $10.5 million position; the fund has 4.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Renaissance Technologies, Bryant Regan’s Lafitte Capital Management and . In terms of the portfolio weights assigned to each position Bandera Partners allocated the biggest weight to BBQ Holdings, Inc. (NASDAQ:BBQ), around 4.13% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, earmarking 1.82 percent of its 13F equity portfolio to BBQ.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BBQ Holdings, Inc. (NASDAQ:BBQ) but similarly valued. These stocks are Vaccinex, Inc. (NASDAQ:VCNX), AnPac Bio-Medical Science Co., Ltd. (NASDAQ:ANPC), Borqs Technologies, Inc. (NASDAQ:BRQS), Pathfinder Bancorp, Inc. (NASDAQ:PBHC), Aridis Pharmaceuticals Inc. (NASDAQ:ARDS), Digital Ally, Inc. (NASDAQ:DGLY), and Nephros, Inc. (NASDAQ:NEPH). This group of stocks’ market caps are similar to BBQ’s market cap.

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As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $27 million in BBQ’s case. Nephros, Inc. (NASDAQ:NEPH) is the most popular stock in this table. On the other hand Pathfinder Bancorp, Inc. (NASDAQ:PBHC) is the least popular one with only 1 bullish hedge fund positions. BBQ Holdings, Inc. (NASDAQ:BBQ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BBQ is 66.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on BBQ as the stock returned 104.7% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.