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Is Brinker International, Inc. (NYSE:EAT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Brinker International, Inc. (NYSE:EAT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EAT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Verve Therapeutics Inc. (NASDAQ:VERV), State Auto Financial Corporation (NASDAQ:STFC), and Nexgen Energy Ltd. (NYSE:NXE) to gather more data points.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let's take a peek at the recent hedge fund action encompassing Brinker International, Inc. (NYSE:EAT).
Robert Pohly of Samlyn Capital
Do Hedge Funds Think EAT Is A Good Stock To Buy Now?
At Q3's end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards EAT over the last 25 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Tremblant Capital, managed by Brett Barakett, holds the number one position in Brinker International, Inc. (NYSE:EAT). Tremblant Capital has a $70.2 million position in the stock, comprising 2.2% of its 13F portfolio. The second most bullish fund manager is Robert Pohly of Samlyn Capital, with a $66.4 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and Dov Gertzulin's DG Capital Management. In terms of the portfolio weights assigned to each position Blue Grotto Capital allocated the biggest weight to Brinker International, Inc. (NYSE:EAT), around 3.01% of its 13F portfolio. DG Capital Management is also relatively very bullish on the stock, setting aside 2.67 percent of its 13F equity portfolio to EAT.
Judging by the fact that Brinker International, Inc. (NYSE:EAT) has faced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there is a sect of hedgies that elected to cut their full holdings in the third quarter. Intriguingly, Matthew Hulsizer's PEAK6 Capital Management dumped the biggest investment of the 750 funds monitored by Insider Monkey, comprising about $10.5 million in stock, and Gregg Moskowitz's Interval Partners was right behind this move, as the fund cut about $9.1 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over 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 Verve Therapeutics Inc. (NASDAQ:VERV), State Auto Financial Corporation (NASDAQ:STFC), Nexgen Energy Ltd. (NYSE:NXE), Forward Air Corporation (NASDAQ:FWRD), SomaLogic Inc. (NASDAQ:SLGC), O-I Glass, Inc. (NYSE:OI), and Glaukos Corporation (NYSE:GKOS). This group of stocks' market valuations resemble EAT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VERV,17,571948,-11 STFC,21,179319,16 NXE,19,60570,8 FWRD,15,299767,-4 SLGC,37,647590,37 OI,32,258993,8 GKOS,23,176344,4 Average,23.4,313504,8.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $314 million. That figure was $284 million in EAT's case. SomaLogic Inc. (NASDAQ:SLGC) is the most popular stock in this table. On the other hand Forward Air Corporation (NASDAQ:FWRD) is the least popular one with only 15 bullish hedge fund positions. Brinker International, Inc. (NYSE:EAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EAT is 67.9. 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 positive signal but 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately EAT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EAT were disappointed as the stock returned -29.5% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.