The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Restaurant Brands International Inc (NYSE:QSR).
Restaurant Brands International Inc (NYSE:QSR) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 37 hedge funds’ portfolios at the end of the first quarter of 2019. At the end of this article we will also compare QSR to other stocks including Keysight Technologies Inc (NYSE:KEYS), L3 Technologies, Inc. (NYSE:LLL), and Garmin Ltd. (NASDAQ:GRMN) to get a better sense of its popularity.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
We’re going to take a peek at the latest hedge fund action surrounding Restaurant Brands International Inc (NYSE:QSR).
What does the smart money think about Restaurant Brands International Inc (NYSE:QSR)?
Heading into the second quarter of 2019, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 46 hedge funds with a bullish position in QSR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pershing Square was the largest shareholder of Restaurant Brands International Inc (NYSE:QSR), with a stake worth $1194.3 million reported as of the end of March. Trailing Pershing Square was Berkshire Hathaway, which amassed a stake valued at $549.4 million. Melvin Capital Management, Eminence Capital, and Suvretta Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Restaurant Brands International Inc (NYSE:QSR) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that decided to sell off their positions entirely last quarter. At the top of the heap, Brandon Haley’s Holocene Advisors dropped the largest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $48.2 million in stock. Jeff Lignelli’s fund, Incline Global Management, also dumped its stock, about $37 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Restaurant Brands International Inc (NYSE:QSR). We will take a look at Keysight Technologies Inc (NYSE:KEYS), L3 Technologies, Inc. (NYSE:LLL), Garmin Ltd. (NASDAQ:GRMN), and Genuine Parts Company (NYSE:GPC). This group of stocks’ market values resemble QSR’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $760 million. That figure was $3609 million in QSR’s case. Keysight Technologies Inc (NYSE:KEYS) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 22 bullish hedge fund positions. Restaurant Brands International Inc (NYSE:QSR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on QSR, though not to the same extent, as the stock returned 0% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.