Is EAT Stock A Buy or Sell?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Brinker International, Inc. (NYSE:EAT).

Is EAT stock a buy? Hedge funds were getting less bullish. The number of bullish hedge fund positions dropped by 7 recently. Brinker International, Inc. (NYSE:EAT) was in 28 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 35. Our calculations also showed that EAT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 35 hedge funds in our database with EAT holdings at the end of September.

Clint Carlson of Carlson Capital

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

At the end of December, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EAT over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brett Barakett’s Tremblant Capital has the most valuable position in Brinker International, Inc. (NYSE:EAT), worth close to $136.7 million, comprising 3.9% of its total 13F portfolio. Coming in second is Southpoint Capital Advisors, led by John Smith Clark, holding a $60 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain Jack Woodruff’s Candlestick Capital Management, Clint Carlson’s Carlson Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Blue Grotto Capital allocated the biggest weight to Brinker International, Inc. (NYSE:EAT), around 6.02% of its 13F portfolio. DG Capital Management is also relatively very bullish on the stock, designating 4.92 percent of its 13F equity portfolio to EAT.

Judging by the fact that Brinker International, Inc. (NYSE:EAT) has faced falling interest from the smart money, logic holds that there was a specific group of fund managers that slashed their full holdings last quarter. It’s worth mentioning that Gabriel Plotkin’s Melvin Capital Management cut the largest investment of all the hedgies watched by Insider Monkey, valued at close to $70.5 million in stock. Robert Pohly’s fund, Samlyn Capital, also sold off its stock, about $61.5 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 7 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Brinker International, Inc. (NYSE:EAT) but similarly valued. We will take a look at JELD-WEN Holding, Inc. (NYSE:JELD), John Wiley & Sons Inc (NYSE:JW), Intra-Cellular Therapies Inc (NASDAQ:ITCI), Assured Guaranty Ltd. (NYSE:AGO), The Goodyear Tire & Rubber Company (NASDAQ:GT), Cabot Corporation (NYSE:CBT), and Oi SA (NYSE:OIBR). This group of stocks’ market valuations resemble EAT’s market valuation.

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As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $512 million in EAT’s case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand Oi SA (NYSE:OIBR) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Brinker International, Inc. (NYSE:EAT) is more popular among hedge funds. Our overall hedge fund sentiment score for EAT is 72. 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 returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on EAT as the stock returned 24.2% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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