This Metric Says You Are Smart to Sell Buffalo Wild Wings (BWLD)

In the eyes of many of your peers, hedge funds are seen as overrated, old financial vehicles of a forgotten age. Although there are over 8,000 hedge funds with their doors open today, Insider Monkey focuses on the masters of this club, around 525 funds. It is assumed that this group controls the majority of the hedge fund industry’s total assets, and by paying attention to their highest performing equity investments, we’ve figured out a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Just as necessary, optimistic insider trading activity is a second way to look at the financial markets. As the old adage goes: there are lots of incentives for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this strategy if you understand where to look (learn more here).

What’s more, it’s important to study the newest info about Buffalo Wild Wings (NASDAQ:BWLD).

What have hedge funds been doing with Buffalo Wild Wings (NASDAQ:BWLD)?

At Q2’s end, a total of 15 of the hedge funds we track held long positions in this stock, a change of -12% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly.

Out of the hedge funds we follow, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Buffalo Wild Wings (NASDAQ:BWLD). Citadel Investment Group has a $45.5 million position in the stock, comprising 0.1% of its 13F portfolio. On Citadel Investment Group’s heels is Donald Chiboucis of Columbus Circle Investors, with a $42.9 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Chuck Royce’s Royce & Associates, Rob Citrone’s Discovery Capital Management and Ron Gutfleish’s Elm Ridge Capital.

Due to the fact Buffalo Wild Wings (NASDAQ:BWLD) has witnessed a fall in interest from the top-tier hedge fund industry, we can see that there is a sect of funds that decided to sell off their entire stakes last quarter. At the top of the heap, Bain Capital’s Brookside Capital dropped the largest stake of all the hedgies we track, valued at close to $30.7 million in stock. SAC Subsidiary’s fund, Sigma Capital Management, also said goodbye to its stock, about $27 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.

What have insiders been doing with Buffalo Wild Wings (NASDAQ:BWLD)?

Legal insider trading, particularly when it’s bullish, is best served when the company in question has seen transactions within the past half-year. Over the latest half-year time period, Buffalo Wild Wings (NASDAQ:BWLD) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Buffalo Wild Wings (NASDAQ:BWLD). These stocks are DineEquity Inc (NYSE:DIN), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Papa John’s Int’l, Inc. (NASDAQ:PZZA), Texas Roadhouse Inc (NASDAQ:TXRH), and Jack in the Box Inc. (NASDAQ:JACK). This group of stocks are in the restaurants industry and their market caps resemble BWLD’s market cap.

Using the returns demonstrated by our tactics, average investors must always keep one eye on hedge fund and insider trading sentiment, and Buffalo Wild Wings (NASDAQ:BWLD) applies perfectly to this mantra.

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