Smart Money Continues to Lose Confidence In McDonald’s Corporation (MCD)

Judging by the fact that McDonald’s Corporation (NYSE:MCD) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds that slashed their full holdings heading into Q4. At the top of the heap, Daniel S. Och’s OZ Management dumped the biggest position of the 700 funds tracked by Insider Monkey, worth about $186 million in stock. Jacob Doft’s fund, Highline Capital Management, also sold off its stock, about $116.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 8 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as McDonald’s Corporation (NYSE:MCD) but similarly valued. We will take a look at GlaxoSmithKline plc (ADR) (NYSE:GSK), CVS Caremark Corporation (NYSE:CVS), AbbVie Inc (NYSE:ABBV), and Schlumberger Limited. (NYSE:SLB). All of these stocks’ market caps are similar to MCD’s market cap.

As you can see these stocks had an average of 51.5 hedge funds with bullish positions and the average amount invested in these stocks was $2.21 billion. That figure was $2.77 billion in MCD’s case. Schlumberger Limited. (NYSE:SLB) is the most popular stock in this table. On the other hand GlaxoSmithKline plc (ADR) (NYSE:GSK) is the least popular one with only 33 bullish hedge fund positions. McDonald’s Corporation (NYSE:MCD) is not the most popular stock in this group but hedge fund interest is still above average, as is the amount of money invested in it. While this is a slightly positive signal, given that the stock has shed smart money investors over the past two quarter, we don’t believe it’s a good time to consider McDonald’s, as we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SLB might be a better candidate to consider a long position in.

Disclosure: None