Darden Restaurants, Inc. (NYSE:DRI) investors should pay attention to a decrease in hedge fund sentiment in recent months.
In the financial world, there are a multitude of indicators investors can use to analyze stocks. Some of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a significant margin (see just how much).
Just as key, positive insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are plenty of reasons for a bullish insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).
Now, let’s take a peek at the recent action encompassing Darden Restaurants, Inc. (NYSE:DRI).
What does the smart money think about Darden Restaurants, Inc. (NYSE:DRI)?
At Q1’s end, a total of 18 of the hedge funds we track held long positions in this stock, a change of -5% from the first quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially.
When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the largest position in Darden Restaurants, Inc. (NYSE:DRI), worth close to $111.5 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Rob Citrone of Discovery Capital Management, with a $40.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Israel Englander’s Millennium Management, and Daniel Arbess’s Xerion.
Seeing as Darden Restaurants, Inc. (NYSE:DRI) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds that decided to sell off their entire stakes in Q1. At the top of the heap, Jim Simons’s Renaissance Technologies dumped the largest position of the 450+ funds we track, worth an estimated $26.2 million in stock., and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund cut about $2.6 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds in Q1.
What have insiders been doing with Darden Restaurants, Inc. (NYSE:DRI)?
Insider buying is particularly usable when the company in question has experienced transactions within the past six months. Over the last 180-day time frame, Darden Restaurants, Inc. (NYSE:DRI) has experienced 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Darden Restaurants, Inc. (NYSE:DRI). These stocks are Domino’s Pizza, Inc. (NYSE:DPZ), Dunkin Brands Group Inc (NASDAQ:DNKN), Chipotle Mexican Grill, Inc. (NYSE:CMG), Tim Hortons Inc. (USA) (NYSE:THI), and Burger King Worldwide Inc (NYSE:BKW). This group of stocks are the members of the restaurants industry and their market caps are closest to DRI’s market cap.