With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was McDonald’s Corporation (NYSE:MCD).
Is McDonald’s Corporation a great stock to buy now? Hedge funds have taken a slightly pessimistic view. The number of bullish hedge fund positions shrunk by 6 in recent months. MCD was in 75 hedge funds’ portfolios at the end of the third quarter of 2015. There were 81 hedge funds in our database with MCD holdings at the end of the previous quarter. 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 Eli Lilly & Co. (NYSE:LLY), Walgreens Boots Alliance Inc (NASDAQ:WBA), and AbbVie Inc (NYSE:ABBV) to gather more data points.
Follow Mcdonalds Corp (NYSE:MCD)
Follow Mcdonalds Corp (NYSE:MCD)
Today there are a lot of methods shareholders use to appraise stocks. A pair of the most underrated methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a significant amount (see the details here).
Keeping this in mind, let’s take a peek at the key action encompassing McDonald’s Corporation (NYSE:MCD).
Hedge fund activity in McDonald’s Corporation (NYSE:MCD)
Heading into Q4, a total of 75 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jonathon Jacobson’s Highfields Capital Management has the biggest position in McDonald’s Corporation (NYSE:MCD), worth close to $1.1607 billion, amounting to 10.2% of its total 13F portfolio. The second largest stake is held by Mason Hawkins’ Southeastern Asset Management, with a $831.7 million position; 7% of its 13F portfolio is allocated to the stock. Some other peers that are bullish contain Daniel S. Och’s OZ Management, Israel Englander’s Millennium Management and Howard Guberman’s Gruss Asset Management.
Seeing as McDonald’s Corporation (NYSE:MCD) has faced declining sentiment from hedge fund managers, it’s easy to see that there were a few fund managers who sold off their positions entirely last quarter. It’s worth mentioning that Larry Robbins’ Glenview Capital sold off the largest investment of the 700 funds watched by Insider Monkey, valued at an estimated $275.8 million in stock. John Lykouretzos’ fund, Hoplite Capital Management, also said goodbye to its stock, about $80.8 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 6 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to McDonald’s Corporation (NYSE:MCD). We will take a look at Eli Lilly & Co. (NYSE:LLY), Walgreens Boots Alliance Inc (NASDAQ:WBA), AbbVie Inc (NYSE:ABBV), and The Boeing Company (NYSE:BA). This group of stocks’ market values match MCD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LLY | 47 | 2290575 | 4 |
| WBA | 91 | 9515034 | 10 |
| ABBV | 78 | 5242795 | -1 |
| BA | 35 | 1177207 | -9 |
As you can see these stocks had an average of 63 hedge funds with bullish positions and the average amount invested in these stocks was $4.56 billion. That figure was $6.11 billion in MCD’s case. Walgreens Boots Alliance Inc (NASDAQ:WBA) is the most popular stock in this table. On the other hand The Boeing Company (NYSE:BA) is the least popular one with only 35 bullish hedge fund positions. McDonald’s Corporation (NYSE:MCD) 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. In this regard WBA might be a better candidate to consider a long position.
