Here’s Why You Should Ignore the Trend and Bet on Darden Restaurants

With this in mind, let’s take a closer look at the popularity of Darden Restaurants among the investors from our database. At the end of June, 38 funds held $1.22 billion worth of the company’s stock in aggregate, equal to 13.70% of the company and significantly above 29 investors that held stakes valued at $1.06 billion in aggregate at the end of March. Starboard Value holds the largest position, which contains 11.64 million shares and amasses over 18% of its equity portfolio, followed by Cliff Asness‘ AQR Capital Management and Joel Greenblatt’s Gotham Asset Management, both of which initiated stakes between April and June and reported 1.10 million shares and 583,700 shares in their 13Fs respectively.

With this in mind, it looks like Darden Restaurants, Inc. (NYSE:DRI)’s decline is an overreaction, since the company posted solid earnings and hedge funds are betting on the company’s long-term prospects. The stock looks even more attractive to those who might want to bet on its spin-off plans, since the transaction will unlock significant shareholder value that currently lies in the company’s real estate assets.

Disclosure: none