Is Brinker International, Inc. (EAT) A Good Stock To Buy Right Now?

Is Brinker International, Inc. (NYSE:EAT) a good stock to buy? We are going to take a look at the hedge fund sentiment to answer this question. It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Brinker International, Inc. (NYSE:EAT).

Brinker International, Inc. (NYSE:EAT) shareholders have witnessed a decrease in hedge fund sentiment lately. EAT was in 22 hedge funds’ portfolios at the end of the third quarter of 2016. There were 24 hedge funds in our database with EAT holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Papa John’s Int’l, Inc. (NASDAQ:PZZA), PRA Health Sciences Inc (NASDAQ:PRAH), and Tech Data Corp (NASDAQ:TECD) to gather more data points.

Now, we’re going to view the latest action regarding Brinker International, Inc. (NYSE:EAT).

How have hedgies been trading Brinker International, Inc. (NYSE:EAT)?

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, a quant fund managed by Cliff Asness, holds the biggest position in Brinker International, Inc. (NYSE:EAT). AQR Capital Management has a $36.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Gotham Asset Management, another quant fund managed by Joel Greenblatt, which holds a $32.9 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain quant fund Renaissance Technologies, Anand Parekh’s Alyeska Investment Group and Israel Englander’s Millennium Management.

Seeing as Brinker International, Inc. (NYSE:EAT) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers that decided to sell off their entire stakes in the third quarter. At the top of the heap, Alexander Mitchell’s Scopus Asset Management dumped the largest investment of all the hedgies followed by Insider Monkey, valued at an estimated $6.8 million in call options., and John D. Gillespie’s Prospector Partners was right behind this move, as the fund dumped about $3.8 million worth. Overall we don’t see any positive signals in terms of hedge fund sentiment towards Brinker.

Let’s now review hedge fund activity in other stocks similar to Brinker International, Inc. (NYSE:EAT). We will take a look at Papa John’s Int’l, Inc. (NASDAQ:PZZA), PRA Health Sciences Inc (NASDAQ:PRAH), Tech Data Corp (NASDAQ:TECD), and Compass Minerals International, Inc. (NYSE:CMP). All of these stocks’ market caps are similar to EAT’s market cap.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $163 million in EAT’s case. PRA Health Sciences Inc (NASDAQ:PRAH) is the most popular stock in this table. On the other hand Compass Minerals International, Inc. (NYSE:CMP) is the least popular one with only 6 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PRAH might be a better candidate to consider a long position.