A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Dine Brands Global, Inc. (NYSE:DIN).
Hedge fund interest in Dine Brands Global, Inc. (NYSE:DIN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that DIN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare DIN to other stocks including MYR Group Inc (NASDAQ:MYRG), Malibu Boats Inc (NASDAQ:MBUU), and eHealth, Inc. (NASDAQ:EHTH) to get a better sense of its popularity.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Robert Pohly of Samlyn Capital
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Do Hedge Funds Think DIN Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DIN over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Dine Brands Global, Inc. (NYSE:DIN) was held by MSD Capital, which reported holding $66.1 million worth of stock at the end of June. It was followed by Fisher Asset Management with a $39 million position. Other investors bullish on the company included Arrowstreet Capital, DG Capital Management, and Samlyn Capital. In terms of the portfolio weights assigned to each position MSD Capital allocated the biggest weight to Dine Brands Global, Inc. (NYSE:DIN), around 76.99% of its 13F portfolio. DG Capital Management is also relatively very bullish on the stock, earmarking 3.64 percent of its 13F equity portfolio to DIN.
Because Dine Brands Global, Inc. (NYSE:DIN) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies that elected to cut their entire stakes by the end of the second quarter. At the top of the heap, Brett Barakett’s Tremblant Capital said goodbye to the largest position of the “upper crust” of funds watched by Insider Monkey, valued at close to $19.6 million in stock, and Philip Hilal’s Clearfield Capital was right behind this move, as the fund dumped about $15.8 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Dine Brands Global, Inc. (NYSE:DIN). We will take a look at MYR Group Inc (NASDAQ:MYRG), Malibu Boats Inc (NASDAQ:MBUU), eHealth, Inc. (NASDAQ:EHTH), NANO-X IMAGING LTD (NASDAQ:NNOX), Generation Bio Co. (NASDAQ:GBIO), Stewart Information Services Corp (NYSE:STC), and NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). All of these stocks’ market caps resemble DIN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MYRG | 13 | 90524 | -1 |
| MBUU | 15 | 120958 | -1 |
| EHTH | 24 | 378801 | 1 |
| NNOX | 11 | 28721 | 8 |
| GBIO | 13 | 201751 | 4 |
| STC | 17 | 112471 | -2 |
| NGM | 19 | 213005 | 1 |
| Average | 16 | 163747 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $218 million in DIN’s case. eHealth, Inc. (NASDAQ:EHTH) is the most popular stock in this table. On the other hand NANO-X IMAGING LTD (NASDAQ:NNOX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Dine Brands Global, Inc. (NYSE:DIN) is more popular among hedge funds. Our overall hedge fund sentiment score for DIN is 85. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately DIN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DIN were disappointed as the stock returned -10.3% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Dine Brands Global Inc. (NYSE:DIN)
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Disclosure: None. This article was originally published at Insider Monkey.
