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Hedge Funds Have Never Been Less Bullish On Restaurant Brands International Inc (QSR)

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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Restaurant Brands International Inc (NYSE:QSR) based on those filings.

Restaurant Brands International Inc (NYSE:QSR) has seen a decrease in enthusiasm from smart money lately. Restaurant Brands International Inc (NYSE:QSR) was in 22 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 59. Our calculations also showed that QSR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most stock holders, hedge funds are seen as slow, outdated investment tools of the past. While there are more than 8000 funds in operation at the moment, Our experts choose to focus on the masters of this club, about 850 funds. Most estimates calculate that this group of people watch over bulk of the hedge fund industry's total asset base, and by tailing their top equity investments, Insider Monkey has formulated various investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Harold Levy Iridian Asset Management
Harold Levy Iridian Asset Management

Harold Levy of Iridian Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's go over the latest hedge fund action encompassing Restaurant Brands International Inc (NYSE:QSR).

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

At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 44 hedge funds with a bullish position in QSR a year ago. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, Pershing Square held the most valuable stake in Restaurant Brands International Inc (NYSE:QSR), which was worth $1527 million at the end of the second quarter. On the second spot was Iridian Asset Management which amassed $141.3 million worth of shares. Citadel Investment Group, Galibier Capital Management, and Incline Global 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 Pershing Square allocated the biggest weight to Restaurant Brands International Inc (NYSE:QSR), around 14.26% of its 13F portfolio. MIC Capital Partners is also relatively very bullish on the stock, dishing out 7.88 percent of its 13F equity portfolio to QSR.

Since Restaurant Brands International Inc (NYSE:QSR) has experienced a decline in interest from the smart money, we can see that there is a sect of hedge funds that elected to cut their positions entirely in the second quarter. Interestingly, Ross Turner's Pelham Capital cut the biggest investment of the "upper crust" of funds monitored by Insider Monkey, valued at close to $163.5 million in stock, and Alexander Mitchell's Scopus Asset Management was right behind this move, as the fund dropped about $87.8 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds in the second quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Restaurant Brands International Inc (NYSE:QSR) but similarly valued. These stocks are The Cooper Companies, Inc. (NYSE:COO), Essex Property Trust Inc (NYSE:ESS), Teledyne Technologies Incorporated (NYSE:TDY), ORIX Corporation (NYSE:IX), Sun Communities Inc (NYSE:SUI), Plug Power, Inc. (NASDAQ:PLUG), and Regions Financial Corporation (NYSE:RF). This group of stocks' market caps match QSR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COO,33,1150171,-10 ESS,21,281090,-9 TDY,36,1440654,5 IX,4,4271,-1 SUI,30,821616,-5 PLUG,34,878412,9 RF,33,242962,1 Average,27.3,688454,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $688 million. That figure was $2008 million in QSR's case. Teledyne Technologies Incorporated (NYSE:TDY) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Restaurant Brands International Inc (NYSE:QSR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for QSR is 40.3. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately QSR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); QSR investors were disappointed as the stock returned -3% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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