In this article you are going to find out whether hedge funds think Dine Brands Global, Inc. (NYSE:DIN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Dine Brands Global, Inc. (NYSE:DIN) has seen an increase in support from the world's most elite money managers lately. DIN was in 21 hedge funds' portfolios at the end of the first quarter of 2020. There were 20 hedge funds in our database with DIN positions at the end of the previous quarter. Our calculations also showed that DIN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are perceived as worthless, outdated investment vehicles of the past. While there are more than 8000 funds trading at the moment, We choose to focus on the crème de la crème of this group, around 850 funds. These hedge fund managers shepherd bulk of all hedge funds' total capital, and by tailing their finest investments, Insider Monkey has figured out several investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_256989" align="aligncenter" width="394"] Dmitry Balyasny of Balyasny Asset Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the fresh hedge fund action regarding Dine Brands Global, Inc. (NYSE:DIN).
What have hedge funds been doing with Dine Brands Global, Inc. (NYSE:DIN)?
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards DIN over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the number one position in Dine Brands Global, Inc. (NYSE:DIN), worth close to $21.6 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is MSD Capital, managed by Glenn Fuhrman and John Phelan, which holds a $21.2 million position; the fund has 73% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Michael Kahan and Jeremy Kahan's North Peak Capital, Israel Englander's Millennium Management and Marc Majzner's Clearline Capital. In terms of the portfolio weights assigned to each position MSD Capital allocated the biggest weight to Dine Brands Global, Inc. (NYSE:DIN), around 73% of its 13F portfolio. North Peak Capital is also relatively very bullish on the stock, designating 3.23 percent of its 13F equity portfolio to DIN.
As industrywide interest jumped, key hedge funds have jumped into Dine Brands Global, Inc. (NYSE:DIN) headfirst. North Peak Capital, managed by Michael Kahan and Jeremy Kahan, established the most outsized position in Dine Brands Global, Inc. (NYSE:DIN). North Peak Capital had $6.7 million invested in the company at the end of the quarter. Marc Majzner's Clearline Capital also initiated a $2.9 million position during the quarter. The other funds with new positions in the stock are Stephen Mildenhall's Contrarius Investment Management, C. Jonathan Gattman's Cloverdale Capital Management, and Dmitry Balyasny's Balyasny Asset Management.
Let's go over hedge fund activity in other stocks similar to Dine Brands Global, Inc. (NYSE:DIN). These stocks are M/I Homes Inc (NYSE:MHO), Himax Technologies, Inc. (NASDAQ:HIMX), Dime Community Bancshares, Inc. (NASDAQ:DCOM), and Diamond S Shipping Inc. (NYSE:DSSI). This group of stocks' market caps resemble DIN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MHO,16,46205,-4 HIMX,9,30979,5 DCOM,10,37714,0 DSSI,16,50899,-2 Average,12.75,41449,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $72 million in DIN's case. M/I Homes Inc (NYSE:MHO) is the most popular stock in this table. On the other hand Himax Technologies, Inc. (NASDAQ:HIMX) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Dine Brands Global, Inc. (NYSE:DIN) is more popular among hedge funds. 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 returned 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on DIN as the stock returned 57.9% so far in Q2 (through June 17th) 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.
Greenlight Capital 2019 Q3 Investor Letter