The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Darden Restaurants, Inc. (NYSE:DRI).
Is DRI stock a buy or sell? The smart money was in a bullish mood. The number of bullish hedge fund positions increased by 1 lately. Darden Restaurants, Inc. (NYSE:DRI) was in 42 hedge funds’ portfolios at the end of December. The all time high for this statistic is 52. Our calculations also showed that DRI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
At the moment there are dozens of gauges stock traders use to evaluate their stock investments. A pair of the most innovative gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a significant amount (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the fresh hedge fund action regarding Darden Restaurants, Inc. (NYSE:DRI).
Do Hedge Funds Think DRI Is A Good Stock To Buy Now?
At Q4’s end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in DRI over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Holocene Advisors held the most valuable stake in Darden Restaurants, Inc. (NYSE:DRI), which was worth $208.5 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $200.4 million worth of shares. Melvin Capital Management, D1 Capital Partners, and Viking Global 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 Dorsal Capital Management allocated the biggest weight to Darden Restaurants, Inc. (NYSE:DRI), around 6.13% of its 13F portfolio. MIG Capital is also relatively very bullish on the stock, designating 2.95 percent of its 13F equity portfolio to DRI.
Now, key hedge funds have jumped into Darden Restaurants, Inc. (NYSE:DRI) headfirst. D1 Capital Partners, managed by Daniel Sundheim, initiated the largest position in Darden Restaurants, Inc. (NYSE:DRI). D1 Capital Partners had $138.9 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $100.9 million position during the quarter. The other funds with brand new DRI positions are Brad Stephens’s Six Columns Capital, Kamyar Khajavi’s MIK Capital, and Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Darden Restaurants, Inc. (NYSE:DRI) but similarly valued. These stocks are Regions Financial Corporation (NYSE:RF), Essex Property Trust Inc (NYSE:ESS), Caesars Entertainment Inc. (NASDAQ:CZR), CarMax Inc (NYSE:KMX), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Waters Corporation (NYSE:WAT), and Hewlett Packard Enterprise Company (NYSE:HPE). This group of stocks’ market valuations are closest to DRI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RF | 26 | 203027 | 3 |
| ESS | 25 | 309571 | -3 |
| CZR | 71 | 1438605 | -3 |
| KMX | 46 | 1485714 | -8 |
| SHG | 7 | 27734 | 3 |
| WAT | 30 | 1993478 | -2 |
| HPE | 30 | 923308 | -4 |
| Average | 33.6 | 911634 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $912 million. That figure was $1411 million in DRI’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 7 bullish hedge fund positions. Darden Restaurants, Inc. (NYSE:DRI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DRI is 57.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on DRI as the stock returned 17.7% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Darden Restaurants Inc (NYSE:DRI)
Follow Darden Restaurants Inc (NYSE:DRI)
Disclosure: None. This article was originally published at Insider Monkey.
