Should You Avoid Darden Restaurants, Inc. (DRI)?

Since Darden Restaurants, Inc. (NYSE:DRI) has faced falling interest from hedge fund managers, it’s safe to say that there exists a select few hedgies that decided to sell off their full holdings in the third quarter. It’s worth mentioning that Jeffrey Smith’s Starboard Value LP cut the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $246.4 million in call options, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dumped about $9.5 million worth of options. These transactions are important to note, as total hedge fund interest fell by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Darden Restaurants, Inc. (NYSE:DRI) but similarly valued. We will take a look at Garmin Ltd. (NASDAQ:GRMN), Crescent Point Energy Corp (NYSE:CPG), ANSYS, Inc. (NASDAQ:ANSS), and Xylem Inc (NYSE:XYL). All of these stocks’ market caps are closest to DRI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GRMN 25 212834 8
CPG 16 47001 -2
ANSS 24 657657 4
XYL 17 469078 -4

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $347 million. That figure was $453 million in DRI’s case. Garmin Ltd. (NASDAQ:GRMN) is the most popular stock in this table. On the other hand Crescent Point Energy Corp (NYSE:CPG) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Darden Restaurants, Inc. (NYSE:DRI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none.