The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider McDonald’s Corporation (NYSE:MCD) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
McDonald’s Corporation (NYSE:MCD) investors should pay attention to a decrease in hedge fund interest recently. McDonald’s Corporation (NYSE:MCD) was in 66 hedge funds’ portfolios at the end of June. The all time high for this statistic is 84. There were 67 hedge funds in our database with MCD holdings at the end of March. Our calculations also showed that MCD isn’t among the 30 most popular stocks among hedge funds (click for Q2 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Aaron Cowen of Suvretta Capital Management
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. Keeping this in mind let’s take a peek at the key hedge fund action surrounding McDonald’s Corporation (NYSE:MCD).
Do Hedge Funds Think MCD Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -1% from one quarter earlier. By comparison, 57 hedge funds held shares or bullish call options in MCD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in McDonald’s Corporation (NYSE:MCD), which was worth $485.1 million at the end of the second quarter. On the second spot was Bridgewater Associates which amassed $322.6 million worth of shares. Citadel Investment Group, Citadel Investment Group, and Adage Capital Management 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 3G Sahana Capital Management allocated the biggest weight to McDonald’s Corporation (NYSE:MCD), around 5.84% of its 13F portfolio. North Fourth Asset Management is also relatively very bullish on the stock, designating 2.8 percent of its 13F equity portfolio to MCD.
Seeing as McDonald’s Corporation (NYSE:MCD) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of fund managers who were dropping their entire stakes in the second quarter. At the top of the heap, Aaron Cowen’s Suvretta Capital Management dropped the biggest stake of the 750 funds tracked by Insider Monkey, totaling about $214 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its stock, about $131.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as McDonald’s Corporation (NYSE:MCD) but similarly valued. We will take a look at Morgan Stanley (NYSE:MS), Medtronic plc (NYSE:MDT), SAP SE (NYSE:SAP), QUALCOMM, Incorporated (NASDAQ:QCOM), Pinduoduo Inc. (NASDAQ:PDD), AstraZeneca plc (NYSE:AZN), and Philip Morris International Inc. (NYSE:PM). This group of stocks’ market valuations are similar to MCD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MS | 69 | 5347633 | -10 |
| MDT | 68 | 3390607 | 3 |
| SAP | 17 | 1603691 | -2 |
| QCOM | 72 | 4047519 | -1 |
| PDD | 49 | 5276960 | -7 |
| AZN | 37 | 2772286 | 3 |
| PM | 46 | 5973614 | -2 |
| Average | 51.1 | 4058901 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.1 hedge funds with bullish positions and the average amount invested in these stocks was $4059 million. That figure was $2715 million in MCD’s case. QUALCOMM, Incorporated (NASDAQ:QCOM) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 17 bullish hedge fund positions. McDonald’s Corporation (NYSE:MCD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MCD is 72.1. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on MCD as the stock returned 8% since the end of Q2 (through 9/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Mcdonalds Corp (NYSE:MCD)
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Disclosure: None. This article was originally published at Insider Monkey.
