In this article we will check out the progression of hedge fund sentiment towards Dine Brands Global, Inc. (NYSE:DIN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Dine Brands Global, Inc. (NYSE:DIN) investors should be aware of an increase in enthusiasm from smart money recently. Dine Brands Global, Inc. (NYSE:DIN) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 26 hedge funds in our database with DIN positions at the end of the fourth quarter. Our calculations also showed that DIN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Now let’s take a glance at the recent hedge fund action regarding Dine Brands Global, Inc. (NYSE:DIN).
Do Hedge Funds Think DIN Is A Good Stock To Buy Now?
At the end of March, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DIN over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, MSD Capital was the largest shareholder of Dine Brands Global, Inc. (NYSE:DIN), with a stake worth $66.7 million reported as of the end of March. Trailing MSD Capital was Fisher Asset Management, which amassed a stake valued at $40.5 million. Arrowstreet Capital, Samlyn Capital, and Tremblant Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position MSD Capital allocated the biggest weight to Dine Brands Global, Inc. (NYSE:DIN), around 79.97% of its 13F portfolio. Clearfield Capital is also relatively very bullish on the stock, setting aside 6.02 percent of its 13F equity portfolio to DIN.
Now, key money managers have jumped into Dine Brands Global, Inc. (NYSE:DIN) headfirst. Samlyn Capital, managed by Robert Pohly, assembled the largest position in Dine Brands Global, Inc. (NYSE:DIN). Samlyn Capital had $20 million invested in the company at the end of the quarter. Brett Barakett’s Tremblant Capital also initiated a $19.6 million position during the quarter. The following funds were also among the new DIN investors: Dov Gertzulin’s DG Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Ali Motamed’s Invenomic Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Dine Brands Global, Inc. (NYSE:DIN). These stocks are Sixth Street Specialty Lending Inc (NYSE:TSLX), Zomedica Pharmaceuticals Corp. (NYSE:ZOM), Ladder Capital Corp (NYSE:LADR), Guess’, Inc. (NYSE:GES), Luminex Corporation (NASDAQ:LMNX), Tennant Company (NYSE:TNC), and Usa Compression Partners LP (NYSE:USAC). This group of stocks’ market valuations are similar to DIN’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $249 million in DIN’s case. Luminex Corporation (NASDAQ:LMNX) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Dine Brands Global, Inc. (NYSE:DIN) is more popular among hedge funds. Our overall hedge fund sentiment score for DIN is 87. 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. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately DIN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DIN were disappointed as the stock returned -4.3% since the end of the first quarter (through 7/9) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.