Is QSR Stock A Buy or Sell?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Restaurant Brands International Inc (NYSE:QSR) makes for a good investment right now.

Is QSR stock a buy or sell? Hedge funds were in an optimistic mood. The number of bullish hedge fund bets went up by 6 lately. Restaurant Brands International Inc (NYSE:QSR) was in 39 hedge funds’ portfolios at the end of the fourth quarter of 2020. 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 Q4 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. 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 124 percentage points since March 2017 (see the details here).

Can hedge funds beat the market

Bill Ackman of Pershing Square

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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Keeping this in mind let’s view the latest hedge fund action regarding Restaurant Brands International Inc (NYSE:QSR).

Do Hedge Funds Think QSR Is A Good Stock To Buy Now?

At Q4’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. On the other hand, there were a total of 52 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.

The largest stake in Restaurant Brands International Inc (NYSE:QSR) was held by Pershing Square, which reported holding $1530.1 million worth of stock at the end of December. It was followed by Pelham Capital with a $189.4 million position. Other investors bullish on the company included Iridian Asset Management, Tremblant Capital, and Alkeon Capital Management. In terms of the portfolio weights assigned to each position Pershing Square allocated the biggest weight to Restaurant Brands International Inc (NYSE:QSR), around 15.3% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, designating 12.54 percent of its 13F equity portfolio to QSR.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Samlyn Capital, managed by Robert Pohly, assembled the largest position in Restaurant Brands International Inc (NYSE:QSR). Samlyn Capital had $60.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $8.2 million investment in the stock during the quarter. The following funds were also among the new QSR investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Brian Scudieri’s Kehrs Ridge Capital, and Michel Massoud’s Melqart Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Restaurant Brands International Inc (NYSE:QSR) but similarly valued. These stocks are Smith & Nephew plc (NYSE:SNN), Amcor plc (NYSE:AMCR), Ventas, Inc. (NYSE:VTR), Xylem Inc (NYSE:XYL), DraftKings Inc. (NASDAQ:DKNG), Dover Corporation (NYSE:DOV), and HubSpot Inc (NYSE:HUBS). All of these stocks’ market caps are similar to QSR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNN 12 78652 2
AMCR 19 247795 1
VTR 18 137388 1
XYL 21 725127 0
DKNG 48 399067 5
DOV 32 738937 -8
HUBS 52 1561960 12
Average 28.9 555561 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $556 million. That figure was $2407 million in QSR’s case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 12 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 63.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on QSR as the stock returned 6% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.