Hedge Funds Are Dumping Darden Restaurants, Inc. (DRI)

Is Darden Restaurants, Inc. (NYSE:DRI) a healthy stock for your portfolio? The best stock pickers are selling. The number of bullish hedge fund bets were cut by 1 lately.

To most stock holders, hedge funds are viewed as slow, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at present, we hone in on the bigwigs of this club, around 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money’s total asset base, and by monitoring their top investments, we have come up with a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as beneficial, positive insider trading sentiment is another way to parse down the world of equities. There are a variety of incentives for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).

Consequently, let’s take a glance at the key action regarding Darden Restaurants, Inc. (NYSE:DRI).

How have hedgies been trading Darden Restaurants, Inc. (NYSE:DRI)?

Heading into Q2, a total of 18 of the hedge funds we track were bullish in this stock, a change of -5% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably.

According to our comprehensive database, Ken Griffin’s Citadel Investment Group had the biggest position in Darden Restaurants, Inc. (NYSE:DRI), worth close to $111.5 million, accounting for 0.2% of its total 13F portfolio. On Citadel Investment Group’s heels is Discovery Capital Management, managed by Rob Citrone, which held a $40.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Israel Englander’s Millennium Management, and Daniel Arbess’s Xerion.

Since Darden Restaurants, Inc. (NYSE:DRI) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of money managers who were dropping their full holdings at the end of the first quarter. Interestingly, Jim Simons’s Renaissance Technologies dropped the biggest stake of all the hedgies we watch, worth close to $26.2 million in stock.. Neil Chriss’s fund, Hutchin Hill Capital, also dumped its stock, about $2.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds at the end of the first quarter.

How have insiders been trading Darden Restaurants, Inc. (NYSE:DRI)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the latest 180-day time period, Darden Restaurants, Inc. (NYSE:DRI) has seen 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Darden Restaurants, Inc. (NYSE:DRI). These stocks are Domino’s Pizza, Inc. (NYSE:DPZ), Dunkin Brands Group Inc (NASDAQ:DNKN), Chipotle Mexican Grill, Inc. (NYSE:CMG), Tim Hortons Inc. (USA) (NYSE:THI), and Burger King Worldwide Inc (NYSE:BKW). This group of stocks belong to the restaurants industry and their market caps are closest to DRI’s market cap.