A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Darden Restaurants, Inc. (NYSE:DRI) during the quarter.
Darden Restaurants, Inc. (NYSE:DRI) investors should be aware of a decrease in support from the world’s most elite money managers lately. 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 Amdocs Limited (NYSE:DOX), NetApp Inc. (NASDAQ:NTAP), and Masco Corporation (NYSE:MAS) to gather more data points.
If you’d ask most shareholders, hedge funds are assumed to be underperforming, old investment vehicles of yesteryear. While there are over an 8000 funds trading today, Our researchers choose to focus on the upper echelon of this group, around 700 funds. These hedge fund managers control the lion’s share of the smart money’s total capital, and by following their finest picks, Insider Monkey has found various investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to go over the new action encompassing Darden Restaurants, Inc. (NYSE:DRI).
How have hedgies been trading Darden Restaurants, Inc. (NYSE:DRI)?
Heading into Q4, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 13% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the largest position in Darden Restaurants, Inc. (NYSE:DRI), worth close to $797.5 million, comprising 17.8% of its total 13F portfolio. On Starboard Value LP’s heels is AQR Capital Management, led by Cliff Asness, holding a $163.9 million position; 0.3% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish include Joel Greenblatt’s Gotham Asset Management, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.