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Here is What Hedge Funds Think About Brinker International, Inc. (EAT)

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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Brinker International, Inc. (NYSE:EAT).

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 Q2 rankings). At the end of this article we will also compare EAT to other stocks including California Water Service Group (NYSE:CWT), Atai Life Sciences N.V. (NASDAQ:ATAI), and Cimpress plc (NASDAQ:CMPR) to get a better sense of its popularity.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Matthew Drapkin - Becker Drapkin Management
Matthew Drapkin - Becker Drapkin Management

Matthew Drapkin of Becker Drapkin 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. Now we're going to take a look at the key hedge fund action regarding Brinker International, Inc. (NYSE:EAT).

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

At the end of the second quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in EAT a year ago. With hedgies' sentiment swirling, there exists a select group of 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 biggest position in Brinker International, Inc. (NYSE:EAT). Tremblant Capital has a $157.4 million position in the stock, comprising 4.3% of its 13F portfolio. On Tremblant Capital's heels is Ken Griffin of Citadel Investment Group, with a $39.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish comprise 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 Tremblant Capital allocated the biggest weight to Brinker International, Inc. (NYSE:EAT), around 4.27% of its 13F portfolio. Blue Grotto Capital is also relatively very bullish on the stock, dishing out 3.97 percent of its 13F equity portfolio to EAT.

Judging by the fact that Brinker International, Inc. (NYSE:EAT) has witnessed declining sentiment from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of money managers that decided to sell off their entire stakes heading into Q3. At the top of the heap, Robert Boucai's Newbrook Capital Advisors sold off the largest position of the "upper crust" of funds watched by Insider Monkey, worth an estimated $61.5 million in stock. Brandon Haley's fund, Holocene Advisors, also sold off its stock, about $30.3 million worth. These bearish behaviors are important to note, 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 similar to Brinker International, Inc. (NYSE:EAT). These stocks are California Water Service Group (NYSE:CWT), Atai Life Sciences N.V. (NASDAQ:ATAI), Cimpress plc (NASDAQ:CMPR), The Cheesecake Factory Incorporated (NASDAQ:CAKE), LendingTree, Inc (NASDAQ:TREE), AMC Networks Inc (NASDAQ:AMCX), and BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). This group of stocks' market caps are closest to EAT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CWT,9,101040,1 ATAI,20,141677,17 CMPR,19,344801,-2 CAKE,26,248072,8 TREE,30,346799,5 AMCX,19,252112,-3 BCRX,25,510918,3 Average,21.1,277917,4.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $353 million in EAT's case. LendingTree, Inc (NASDAQ:TREE) is the most popular stock in this table. On the other hand California Water Service Group (NYSE:CWT) is the least popular one with only 9 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 81.6. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 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 -23.1% since the end of the second quarter (through 10/15) 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 since 2019.

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