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Hedge Funds Have Never Been This Bullish On Brinker International, Inc. (EAT)

Asma UL Husna
·5 min read

After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Brinker International, Inc. (NYSE:EAT).

Brinker International, Inc. (NYSE:EAT) has seen an increase in enthusiasm from smart money lately. Brinker International, Inc. (NYSE:EAT) was in 35 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EAT isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

Today there are a multitude of signals investors have at their disposal to assess their stock investments. Two of the most innovative signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can outperform the market by a significant margin (see the details here).

Gabriel Plotkin Melvin Capital Management
Gabriel Plotkin Melvin Capital Management

Gabriel Plotkin of Melvin Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 take a peek at the new hedge fund action regarding Brinker International, Inc. (NYSE:EAT).

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

At Q3's end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EAT over the last 21 quarters. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Melvin Capital Management held the most valuable stake in Brinker International, Inc. (NYSE:EAT), which was worth $70.5 million at the end of the third quarter. On the second spot was Samlyn Capital which amassed $61.5 million worth of shares. Arrowstreet Capital, Tremblant Capital, and Candlestick Capital Management 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 DG Capital Management allocated the biggest weight to Brinker International, Inc. (NYSE:EAT), around 8.06% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, earmarking 3.34 percent of its 13F equity portfolio to EAT.

As one would reasonably expect, key money managers were breaking ground themselves. Melvin Capital Management, managed by Gabriel Plotkin, assembled the largest position in Brinker International, Inc. (NYSE:EAT). Melvin Capital Management had $70.5 million invested in the company at the end of the quarter. Brett Barakett's Tremblant Capital also initiated a $36.9 million position during the quarter. The other funds with brand new EAT positions are Jack Woodruff's Candlestick Capital Management, John Smith Clark's Southpoint Capital Advisors, and Matthew Halbower's Pentwater Capital Management.

Let's go over hedge fund activity in other stocks similar to Brinker International, Inc. (NYSE:EAT). These stocks are Visteon Corp (NASDAQ:VC), Cardlytics, Inc. (NASDAQ:CDLX), FormFactor, Inc. (NASDAQ:FORM), Magellan Health Inc (NASDAQ:MGLN), Essential Properties Realty Trust, Inc. (NYSE:EPRT), Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), and Accolade, Inc. (NASDAQ:ACCD). This group of stocks' market values are similar to EAT's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VC,28,319170,5 CDLX,29,599537,2 FORM,20,92137,-3 MGLN,21,449995,-2 EPRT,12,79272,-1 IBA,3,32383,0 ACCD,11,65314,11 Average,17.7,233973,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $438 million in EAT's case. Cardlytics, Inc. (NASDAQ:CDLX) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) 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 90. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on EAT as the stock returned 29.1% since the end of September (through 12/18) 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.

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

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