We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Restaurant Brands International Inc (NYSE:QSR).
Restaurant Brands International Inc (NYSE:QSR) was in 55 hedge funds’ portfolios at the end of September. QSR investors should be aware of an increase in support from the world’s most elite money managers in recent months. There were 39 hedge funds in our database with QSR positions at the end of the previous quarter. Our calculations also showed that QSR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
In the eyes of most shareholders, hedge funds are seen as worthless, old investment tools of the past. While there are more than 8000 funds in operation today, We look at the upper echelon of this club, around 750 funds. These investment experts command the majority of all hedge funds’ total capital, and by keeping an eye on their matchless investments, Insider Monkey has found a number of investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Bill Ackman of Pershing Square
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s take a look at the recent hedge fund action regarding Restaurant Brands International Inc (NYSE:QSR).
Hedge fund activity in Restaurant Brands International Inc (NYSE:QSR)
Heading into the fourth quarter of 2019, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 41% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards QSR over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pershing Square held the most valuable stake in Restaurant Brands International Inc (NYSE:QSR), which was worth $1073.1 million at the end of the third quarter. On the second spot was Berkshire Hathaway which amassed $600.3 million worth of shares. Steadfast Capital Management, Two Sigma Advisors, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pershing Square allocated the biggest weight to Restaurant Brands International Inc (NYSE:QSR), around 17.13% of its 13F portfolio. Two Creeks Capital Management is also relatively very bullish on the stock, setting aside 6.84 percent of its 13F equity portfolio to QSR.
As aggregate interest increased, key hedge funds have been driving this bullishness. Marshall Wace, managed by Paul Marshall and Ian Wace, created the most valuable position in Restaurant Brands International Inc (NYSE:QSR). Marshall Wace had $135.1 million invested in the company at the end of the quarter. James Crichton’s Hitchwood Capital Management also initiated a $99.6 million position during the quarter. The other funds with new positions in the stock are Jeffrey Talpins’s Element Capital Management, Simon Sadler’s Segantii Capital, and Lee Ainslie’s Maverick Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Restaurant Brands International Inc (NYSE:QSR) but similarly valued. These stocks are Best Buy Co., Inc. (NYSE:BBY), CMS Energy Corporation (NYSE:CMS), Lennar Corporation (NYSE:LEN), and KeyCorp (NYSE:KEY). This group of stocks’ market valuations are closest to QSR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BBY | 27 | 628028 | -4 |
| CMS | 26 | 942764 | 4 |
| LEN | 57 | 1988724 | 4 |
| KEY | 28 | 671066 | -3 |
| Average | 34.5 | 1057646 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $1058 million. That figure was $4250 million in QSR’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 26 bullish hedge fund positions. Restaurant Brands International Inc (NYSE:QSR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately QSR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on QSR were disappointed as the stock returned 26.7% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
