Should You Buy Chuy’s Holdings Inc (CHUY)?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Chuy’s Holdings Inc (NASDAQ:CHUY)? The smart money sentiment can provide an answer to this question.

Is Chuy’s Holdings Inc (NASDAQ:CHUY) a healthy stock for your portfolio? Money managers are in an optimistic mood. The number of bullish hedge fund positions went up by 7 recently. 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 Westwood Holdings Group, Inc. (NYSE:WHG), Pengrowth Energy Corp (USA) (NYSE:PGH), and Anika Therapeutics, Inc. (NASDAQ:ANIK) to gather more data points.

At the moment there are a multitude of metrics market participants employ to grade their holdings. A pair of the less utilized metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the market by a solid margin (see the details here).

With all of this in mind, let’s take a peek at the recent action surrounding Chuy’s Holdings Inc (NASDAQ:CHUY).

What have hedge funds been doing with Chuy’s Holdings Inc (NASDAQ:CHUY)?

Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a surge of 64% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Weatherbie Capital, managed by Matthew A. Weatherbie, holds the largest position in Chuy’s Holdings Inc (NASDAQ:CHUY). Weatherbie Capital has a $22.6 million stake in the stock, comprising 2.6% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $8.2 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass Bill Miller’s Legg Mason Capital Management, Mark Broach’s Manatuck Hill Partners and D. E. Shaw’s D E Shaw.

Now, specific money managers were breaking ground themselves. D E Shaw, managed by D. E. Shaw, created the most outsized position in Chuy’s Holdings Inc (NASDAQ:CHUY), worth an estimated $3.4 million at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also initiated a $1.5 million position during the quarter. The other funds with brand new CHUY positions are John Overdeck and David Siegel’s Two Sigma Advisors, Jim Simons’s Renaissance Technologies, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Chuy’s Holdings Inc (NASDAQ:CHUY). We will take a look at Westwood Holdings Group, Inc. (NYSE:WHG), Pengrowth Energy Corp (USA) (NYSE:PGH), Anika Therapeutics, Inc. (NASDAQ:ANIK), and Uniqure NV (NASDAQ:QURE). This group of stocks’ market values are closest to CHUY’s market value.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $60 million in CHUY’s case, a positive sign. Uniqure NV (NASDAQ:QURE) is the most popular stock in this table. On the other hand Westwood Holdings Group, Inc. (NYSE:WHG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Chuy’s Holdings Inc (NASDAQ:CHUY) 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.