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Brinker International, Inc. (EAT): Insiders Are Buying, Should You?

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Brinker International, Inc. (NYSE:EAT) was in 20 hedge funds’ portfolio at the end of the first quarter of 2013. EAT investors should pay attention to an increase in enthusiasm from smart money recently. There were 19 hedge funds in our database with EAT holdings at the end of the previous quarter.

To most traders, hedge funds are assumed to be unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the bigwigs of this group, around 450 funds. It is estimated that this group controls the majority of the smart money’s total capital, and by watching their best investments, we have revealed a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as key, optimistic insider trading activity is another way to break down the financial markets. There are a variety of stimuli for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this tactic if you know where to look (learn more here).

Keeping this in mind, let’s take a gander at the latest action regarding Brinker International, Inc. (NYSE:EAT).

How are hedge funds trading Brinker International, Inc. (NYSE:EAT)?

In preparation for this quarter, a total of 20 of the hedge funds we track were long in this stock, a change of 5% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly.

Brinker International, Inc. (NYSE:EAT)Of the funds we track, Ken Griffin’s Citadel Investment Group had the most valuable position in Brinker International, Inc. (NYSE:EAT), worth close to $36.3 million, comprising 0.1% of its total 13F portfolio. Coming in second is Dreman Value Management, managed by David Dreman, which held a $35.9 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Jim Simons’s Renaissance Technologies, Mark Kingdon’s Kingdon Capital and Cliff Asness’s AQR Capital Management.

As aggregate interest increased, key money managers were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, created the most valuable position in Brinker International, Inc. (NYSE:EAT). Scopus Asset Management had 5.3 million invested in the company at the end of the quarter. Jeffrey Vinik’s Vinik Asset Management also initiated a $3.8 million position during the quarter. The following funds were also among the new EAT investors: Charles Davidson’s Wexford Capital, Glenn Russell Dubin’s Highbridge Capital Management, and Israel Englander’s Catapult Capital Management.

How have insiders been trading Brinker International, Inc. (NYSE:EAT)?

Bullish insider trading is most useful when the company in focus has seen transactions within the past half-year. Over the latest 180-day time frame, Brinker International, Inc. (NYSE:EAT) has experienced 1 unique insiders buying, and 7 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Brinker International, Inc. (NYSE:EAT). These stocks are The Cheesecake Factory Incorporated (NASDAQ:CAKE), Bloomin’ Brands Inc (NASDAQ:BLMN), The Wendy’s Company (NASDAQ:WEN), Domino’s Pizza, Inc. (NYSE:DPZ), and Arcos Dorados Holding Inc (NYSE:ARCO). This group of stocks are in the restaurants industry and their market caps resemble EAT’s market cap.

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