Is Buffalo Wild Wings (BWLD) A Good Stock To Buy?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Buffalo Wild Wings (NASDAQ:BWLD) has seen a decrease in support from the world’s most elite money managers of late. 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 Allegiant Travel Company (NASDAQ:ALGT), Symetra Financial Corporation (NYSE:SYA), and Assured Guaranty Ltd. (NYSE:AGO) to gather more data points.

According to most investors, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our researchers choose to focus on the upper echelon of this group, about 700 funds. These hedge fund managers shepherd bulk of the smart money’s total capital, and by keeping an eye on their unrivaled investments, Insider Monkey has revealed numerous investment strategies that have historically beaten the broader indices. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, we’re going to take a gander at the new action encompassing Buffalo Wild Wings (NASDAQ:BWLD).

How have hedgies been trading Buffalo Wild Wings (NASDAQ:BWLD)?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 19% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Chilton Investment Company, managed by Richard Chilton, holds the largest position in Buffalo Wild Wings (NASDAQ:BWLD). At the end of the quarter, the fund had a $92.7 million position in the stock, comprising 3.3% of its 13F portfolio. Sitting at the No. 2 spot is Point72 Asset Management, led by Steve Cohen, holding a $70.2 million position; 0.6% of its 13F portfolio is allocated to the company. Some other peers that hold long positions encompass Ken Griffin’s Citadel Investment Group, Gabriel Plotkin’s Melvin Capital Management and Neil Chriss’s Hutchin Hill Capital.

Judging by the fact that Buffalo Wild Wings (NASDAQ:BWLD) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few hedgies who were dropping their positions entirely heading into Q4. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest stake of all the hedgies monitored by Insider Monkey, worth about $24.1 million in stock. Andy Redleaf’s fund, Whitebox Advisors, also said goodbye to its investment, about $7.8 million worth of BWLD shares. These moves are important to note, as total hedge fund interest fell by 5 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Buffalo Wild Wings (NASDAQ:BWLD) but similarly valued. We will take a look at Allegiant Travel Company (NASDAQ:ALGT), Symetra Financial Corporation (NYSE:SYA), Assured Guaranty Ltd. (NYSE:AGO), and Highwoods Properties Inc (NYSE:HIW). This group of stocks’ market caps resemble BWLD’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $393 million. That figure was $357 million in BWLD’s case. Assured Guaranty Ltd. (NYSE:AGO) is the most popular stock in this table, while Highwoods Properties Inc (NYSE:HIW) is the least popular one with only 9 bullish hedge fund positions. Buffalo Wild Wings (NASDAQ:BWLD) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AGO might be a better candidate to consider a long position.