Big Hedge Funds Washed Their Hands of These Companies in Q1

The latest round of 13F filings was wrapped up (for the most part) on Monday, as thousands of hedge funds reported the content of their equity portfolios with the SEC, as of end of the first quarter. We’ve already found and reported on a number of prominent moves made by some of the top investors that we track and in this article we’ll do the same, with an eye on some large positions that were dumped during the first quarter. Given that, these stocks could be considered compelling short ideas by some, or stocks that retail investors should be wary of at the least, given that prominent hedge funds including Stephen Mandel‘s Lone Pine Capital, Viking Global, George Soros‘ family office, and Point72 Asset Management, offloaded their entire holdings in these companies during the first three months of the year. Of course, we can’t firmly state whether it was a bearish take on these stocks, or other factors like portfolio rebalancing that led to their removal, so these moves should be considered alongside other factors as part of an analysis process. With that said, let’s check out five stocks that world-class money managers disposed large positions in during the first quarter.

At Insider Monkey, we follow around 800 smart money investors, whose 13F portfolios we analyze quarterly to determine how they are collectively trading thousands of stocks. We identify their top 15 small-cap stocks using this methodology, and have built a market-beating investment strategy around that data (see more details here).

Weight Watchers International, Inc. (NYSE:WTW)

Steve Cohen‘s family office Point72 Asset Management ditched its entire stake in the $846 million provider of weight management services, which comprised 1.93 million shares on December 31. Considering that Weight Watchers International, Inc. (NYSE:WTW)’s stock has cratered by more than 41% since the start of the year and that short interest in the company is standing at about 29% of the float as of April 29, it is safe to say that there is substantial bearish sentiment around the company. The excitement surrounding Oprah Winfrey buying a 10% stake in the company and joining its board in October of last year seems to be fading away, though shares are still up by nearly 100% since the day before her involvement was announced. The company is still looking for ways to collaborate more with Winfrey and did show some positive customer growth in the first quarter, so all hope is not lost. Another fund that disposed of its entire Weight Watchers International, Inc. (NYSE:WTW) holding in the first quarter was Marc Majzner‘s Clearline Capital, which held 1.62 million shares at the end of last year.

McDonald’s Corporation (NYSE:MCD)

The $112 billion fast food company is looking to make a turnaround by revamping its products and services, and the endeavor has thus far been successful, with shares having rallied by more than 8% this year. Soros Fund Management appears to be believe there is not much room left to run for the stock from here however, having offloaded its 494,200 shares of McDonald’s Corporation (NYSE:MCD) in the first quarter. Daniel S. Och’s OZ Management also cut its stake in the company by 61% to 2.18 million shares during the same period. McDonald’s Corporation (NYSE:MCD) managed to beat both the top and bottom-line estimates with its first quarter financial results and the short interest in the company stood at just 1.17% of its outstanding float on April 29.

We’ll look into the dumping of three other major stocks by hedge funds during the first quarter on page two.

Yum! Brands, Inc.(NYSE:YUM)

Let’s move on to another company operating in the quick service restaurants industry that Soros Fund Management sold out of during the first quarter, liquidating 655,000 Yum! Brands, Inc.(NYSE:YUM) shares. Like shares of McDonald’s, Yum’s stock has also posted strong gains this year, amounting to 10.9%. On May 3 Yum filed with the SEC to spin off its China operations into a separate publicly-traded company. China contributes about 35% to the company’s top line and that figure is on the rise. KFC, which is Yum’s bestselling brand in the world’s second-largest economy, posted 12% same-store sales growth year-over-year in the first quarter. Contrary to Soros, Dan Loeb‘s Third Point was extremely bullish on the company in the first trimester, boosting its stake to 5.5 million shares.

Priceline Group Inc (NASDAQ:PCLN)

Andreas Halvorsen‘s Viking Global gave up on the $63 billion provider of travel and restaurant reservations and related services during the first quarter, as it dumped its 393,200 shares of the company. Priceline Group Inc (NASDAQ:PCLN)’s stock is trading nearly sideways on a year-to-date basis and the company beat both the top and bottom-line expectations with its first quarter financial results. However, an air of uncertainty looms over Priceline’s future as it continues to search for a new CEO after former CEO Darren Huston resigned following the revelation that he had an inappropriate relationship with an employee. Tiger Global Management, which is led by Chase Coleman, cut its Priceline Group Inc (NASDAQ:PCLN) holding by 28% to about 551,000 shares during the first three months of this year.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

Short interest in Valeant is receding, with it currently standing at 6.53% of the float as of the end of April. Nonetheless, Lone Pine disposed of its 5.83 million Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares during the first quarter, shares which have seen their value depreciate by over 70% so far this year. Valeant shares have gained slight upward momentum recently however, after the company announced that it will offer discounts on two of its key heart drugs, Isuprel and Nitropress, as well as on the news that Andrew Left, the man who exposed Valeant’s dubious relationship with pharmacies, has taken a long position in the stock. Bill Ackman’s Pershing Square, a long-time Valeant Pharmaceuticals Intl Inc (NYSE:VRX) bull, upped its stake in the company by 31% during the first quarter to about 21.60 million shares .

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