Hedge Funds Are Crazy About Dine Brands Global, Inc. (DIN)

In this article we will analyze whether Dine Brands Global, Inc. (NYSE:DIN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Dine Brands Global, Inc. (NYSE:DIN) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that DIN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 Ladder Capital Corp (NYSE:LADR), Griffon Corporation (NYSE:GFF), and Connect Biopharma Holdings Limited (NASDAQ:CNTB) to gather more data points.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the recent hedge fund action encompassing Dine Brands Global, Inc. (NYSE:DIN).

Ian Wace of Marshall Wace

Do Hedge Funds Think DIN Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DIN over the last 25 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

More specifically, MSD Capital was the largest shareholder of Dine Brands Global, Inc. (NYSE:DIN), with a stake worth $60.1 million reported as of the end of September. Trailing MSD Capital was Simcoe Capital Management, which amassed a stake valued at $34.8 million. Fisher Asset Management, Arrowstreet Capital, and Samlyn Capital 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 MSD Capital allocated the biggest weight to Dine Brands Global, Inc. (NYSE:DIN), around 74.97% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, setting aside 3.43 percent of its 13F equity portfolio to DIN.

Due to the fact that Dine Brands Global, Inc. (NYSE:DIN) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of fund managers who were dropping their entire stakes in the third quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management sold off the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $2 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its stock, about $1.3 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Dine Brands Global, Inc. (NYSE:DIN). These stocks are Ladder Capital Corp (NYSE:LADR), Griffon Corporation (NYSE:GFF), Connect Biopharma Holdings Limited (NASDAQ:CNTB), Customers Bancorp Inc (NYSE:CUBI), The Greenbrier Companies Inc (NYSE:GBX), TriMas Corp (NASDAQ:TRS), and BP Midstream Partners LP (NYSE:BPMP). This group of stocks’ market valuations match DIN’s market valuation.

View table here if you experience formatting issues.

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 $88 million. That figure was $247 million in DIN’s case. Customers Bancorp Inc (NYSE:CUBI) is the most popular stock in this table. On the other hand BP Midstream Partners LP (NYSE:BPMP) is the least popular one with only 4 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 31.1% in 2021 through December 9th and still beat the market by 5.1 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 -1.1% since the end of the third quarter (through 12/9) 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.

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Disclosure: None. This article was originally published at Insider Monkey.