Hedge Funds Are Buying Brinker International, Inc. (EAT)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Brinker International, Inc. (NYSE:EAT) based on those filings.

Brinker International, Inc. (NYSE:EAT) investors should pay attention to an increase in support from the world’s most elite money managers lately. Brinker International, Inc. (NYSE:EAT) was in 31 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that EAT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a look at the fresh hedge fund action encompassing Brinker International, Inc. (NYSE:EAT).

Do Hedge Funds Think EAT Is A Good Stock To Buy Now?

At Q1’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EAT over the last 23 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Brett Barakett’s Tremblant Capital has the number one position in Brinker International, Inc. (NYSE:EAT), worth close to $164.8 million, corresponding to 4.8% of its total 13F portfolio. The second largest stake is held by Newbrook Capital Advisors, managed by Robert Boucai, which holds a $61.5 million position; 4.2% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Ken Griffin’s Citadel Investment Group, Brandon Haley’s Holocene Advisors and Jack Woodruff’s Candlestick Capital Management. In terms of the portfolio weights assigned to each position Blue Grotto Capital allocated the biggest weight to Brinker International, Inc. (NYSE:EAT), around 7.03% of its 13F portfolio. Tremblant Capital is also relatively very bullish on the stock, designating 4.79 percent of its 13F equity portfolio to EAT.

Consequently, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in Brinker International, Inc. (NYSE:EAT). Citadel Investment Group had $36.7 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $30.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Brett Barakett’s Tremblant Capital, Alexander Mitchell’s Scopus Asset Management, and Kamyar Khajavi’s MIK Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Brinker International, Inc. (NYSE:EAT). These stocks are Assured Guaranty Ltd. (NYSE:AGO), Shutterstock Inc (NYSE:SSTK), Revolve Group, Inc. (NYSE:RVLV), Vertex, Inc. (NASDAQ:VERX), Butterfly Network, Inc. (NYSE:BFLY), Summit Materials Inc (NYSE:SUM), and Camping World Holdings, Inc. (NYSE:CWH). This group of stocks’ market valuations are closest to EAT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AGO 22 192881 5
SSTK 18 207880 -5
RVLV 29 256608 5
VERX 11 40913 0
BFLY 32 299537 32
SUM 32 198758 1
CWH 24 325789 -3
Average 24 217481 5

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $475 million in EAT’s case. Butterfly Network, Inc. (NYSE:BFLY) is the most popular stock in this table. On the other hand Vertex, Inc. (NASDAQ:VERX) is the least popular one with only 11 bullish hedge fund positions. Brinker International, Inc. (NYSE:EAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EAT is 82.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately EAT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EAT were disappointed as the stock returned -14.4% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.