We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent 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 funds think of McDonald’s Corporation (NYSE:MCD) based on that data.
McDonald’s Corporation (NYSE:MCD) was in 57 hedge funds’ portfolios at the end of December. MCD investors should be aware of an increase in enthusiasm from smart money recently. There were 52 hedge funds in our database with MCD positions at the end of the previous quarter. Our calculations also showed that MCD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
At the moment there are a large number of indicators stock traders can use to evaluate their holdings. A duo of the less known indicators are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform their index-focused peers by a healthy amount (see the details here).
Clint Carlson of Carlson Capital
We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations. Federal Reserve and Central Banks all around world are printing money like there is no tomorrow, so we check out this this precious metals expert’s stock pick. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the new hedge fund action regarding McDonald’s Corporation (NYSE:MCD).
What does smart money think about McDonald’s Corporation (NYSE:MCD)?
At the end of the fourth quarter, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the third quarter of 2019. By comparison, 48 hedge funds held shares or bullish call options in MCD a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Two Sigma Advisors held the most valuable stake in McDonald’s Corporation (NYSE:MCD), which was worth $409.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $258.1 million worth of shares. AQR Capital Management, Adage Capital Management, and Citadel Investment Group 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 Interval Partners allocated the biggest weight to McDonald’s Corporation (NYSE:MCD), around 2.99% of its 13F portfolio. North Fourth Asset Management is also relatively very bullish on the stock, designating 2.9 percent of its 13F equity portfolio to MCD.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Interval Partners, managed by Gregg Moskowitz, assembled the largest position in McDonald’s Corporation (NYSE:MCD). Interval Partners had $83.4 million invested in the company at the end of the quarter. James Parsons’s Junto Capital Management also initiated a $26.3 million position during the quarter. The following funds were also among the new MCD investors: Anthony Joseph Vaccarino’s North Fourth Asset Management, Clint Carlson’s Carlson Capital, and Qing Li’s Sciencast Management.
Let’s now take a look at hedge fund activity in other stocks similar to McDonald’s Corporation (NYSE:MCD). These stocks are PetroChina Company Limited (NYSE:PTR), salesforce.com, inc. (NYSE:CRM), NVIDIA Corporation (NASDAQ:NVDA), and Amgen, Inc. (NASDAQ:AMGN). This group of stocks’ market caps resemble MCD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PTR | 13 | 94057 | 0 |
| CRM | 112 | 9798571 | 3 |
| NVDA | 79 | 3179400 | 23 |
| AMGN | 58 | 2290267 | 3 |
| Average | 65.5 | 3840574 | 7.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 65.5 hedge funds with bullish positions and the average amount invested in these stocks was $3841 million. That figure was $1633 million in MCD’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 13 bullish hedge fund positions. McDonald’s Corporation (NYSE:MCD) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 1.0% in 2020 through April 20th but beat the market by 11 percentage points. A small number of hedge funds were also right about betting on MCD, though not to the same extent, as the stock returned -7.5% during the same time period and outperformed the market.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
