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 at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Restaurant Brands International Inc (NYSE:QSR).
Is QSR a good stock to buy? Restaurant Brands International Inc (NYSE:QSR) shareholders have witnessed a decrease in enthusiasm from smart money lately. Restaurant Brands International Inc (NYSE:QSR) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 59. Our calculations also showed that QSR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Now let’s view the recent hedge fund action regarding Restaurant Brands International Inc (NYSE:QSR).
Do Hedge Funds Think QSR Is A Good Stock To Buy Now?
At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2020. On the other hand, there were a total of 59 hedge funds with a bullish position in QSR 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.
The largest stake in Restaurant Brands International Inc (NYSE:QSR) was held by Pershing Square, which reported holding $1444.6 million worth of stock at the end of September. It was followed by Pelham Capital with a $281.3 million position. Other investors bullish on the company included D E Shaw, Tremblant Capital, and Atalan Capital. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to Restaurant Brands International Inc (NYSE:QSR), around 21.75% of its 13F portfolio. Pershing Square is also relatively very bullish on the stock, dishing out 16.37 percent of its 13F equity portfolio to QSR.
Since Restaurant Brands International Inc (NYSE:QSR) has faced falling interest from hedge fund managers, we can see that there exists a select few hedge funds who were dropping their entire stakes in the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, comprising close to $50.7 million in stock, and Gavin Baker’s Atreides Management was right behind this move, as the fund said goodbye to about $47 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 11 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Restaurant Brands International Inc (NYSE:QSR). We will take a look at Canon Inc. (NYSE:CAJ), Amcor plc (NYSE:AMCR), Deutsche Bank AG (NYSE:DB), ViacomCBS Inc. (NASDAQ:VIAC), Hologic, Inc. (NASDAQ:HOLX), PT Telekomunikasi Indonesia (NYSE:TLK), and Smith & Nephew plc (NYSE:SNN). This group of stocks’ market values are similar to 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 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $571 million. That figure was $2743 million in QSR’s case. Hologic, Inc. (NASDAQ:HOLX) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 7 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 overall hedge fund sentiment score for QSR is 41. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately QSR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on QSR were disappointed as the stock returned 8.6% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.