Hedge Funds Aren’t Crazy About DineEquity Inc (DIN) Anymore

DineEquity Inc (NYSE:DIN) was in 21 hedge funds’ portfolio at the end of the first quarter of 2013. DIN has experienced a decrease in hedge fund sentiment in recent months. There were 21 hedge funds in our database with DIN positions at the end of the previous quarter.

According to most investors, hedge funds are seen as worthless, old financial vehicles of years past. While there are greater than 8000 funds trading at present, we choose to focus on the moguls of this club, around 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total asset base, and by keeping an eye on their top stock picks, we have revealed a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as beneficial, positive insider trading activity is a second way to break down the stock market universe. As the old adage goes: there are a variety of reasons for an insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if “monkeys” know what to do (learn more here).

Consequently, we’re going to take a gander at the key action regarding DineEquity Inc (NYSE:DIN).

How are hedge funds trading DineEquity Inc (NYSE:DIN)?

Heading into Q2, a total of 21 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings considerably.

Of the funds we track, Glenn Fuhrman and John Phelan’s MSD Capital had the most valuable position in DineEquity Inc (NYSE:DIN), worth close to $161.8 million, accounting for 29.5% of its total 13F portfolio. Sitting at the No. 2 spot is Southeastern Asset Management, managed by Mason Hawkins, which held a $144.3 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include James Crichton and Adam Weiss’s Scout Capital Management, John Bader’s Halcyon Asset Management and Christopher R. Hansen’s Valiant Capital.

Judging by the fact that DineEquity Inc (NYSE:DIN) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds that slashed their positions entirely in Q1. Interestingly, Amy Minella’s Cardinal Capital cut the biggest stake of the “upper crust” of funds we key on, worth an estimated $19.2 million in stock.. John Murphy’s fund, Alydar Capital, also dropped its stock, about $10.7 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading DineEquity Inc (NYSE:DIN)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past six months. Over the latest six-month time period, DineEquity Inc (NYSE:DIN) has seen zero unique insiders buying, and 7 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to DineEquity Inc (NYSE:DIN). These stocks are Buffalo Wild Wings (NASDAQ:BWLD), Jack in the Box Inc. (NASDAQ:JACK), Bob Evans Farms Inc (NASDAQ:BOBE), Texas Roadhouse Inc (NASDAQ:TXRH), and Papa John’s Int’l, Inc. (NASDAQ:PZZA). All of these stocks are in the restaurants industry and their market caps resemble DIN’s market cap.