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Should You Avoid Denny’s Corporation (DENN)?

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Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Denny’s Corporation (NASDAQ:DENN) from the perspective of those successful funds.

Denny’s Corporation (NASDAQ:DENN) investors should pay attention to a decrease in support from the world’s most successful money managers lately. DENN was in 13 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with DENN holdings at the end of the previous quarter. At the end of this article we will also compare DENN to other stocks including Scorpio Tankers Inc. (NYSE:STNG), TrueCar Inc (NASDAQ:TRUE), and Ingles Markets, Incorporated (NASDAQ:IMKTA) to get a better sense of its popularity.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Hedge fund activity in Denny’s Corporation (NASDAQ:DENN)

Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 13% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in DENN at the beginning of this year. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

HedgeFundSentimentChart

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, has the largest position in Denny’s Corporation (NASDAQ:DENN), worth close to $36.3 million. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital holding a $7.9 million position. Other peers that are bullish encompass Robert B. Gillam’s McKinley Capital Management, D. E. Shaw’s D E Shaw and Mario Gabelli’s GAMCO Investors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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