Smart Money Continues to Lose Confidence In McDonald’s Corporation (MCD)

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially-hedged and aim to deliver attractive risk-adjusted returns rather than follow the ups-and-downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards McDonald’s Corporation (NYSE:MCD).

McDonald’s Corporation (NYSE:MCD) has experienced a decrease in activity from the world’s largest hedge funds in recent months. MCD was in 55 hedge funds’ portfolios at the end of the third quarter of 2016. There were 63 hedge funds in our database with MCD positions at the end of the previous quarter. At the end of this article we will also compare MCD to other stocks including GlaxoSmithKline plc (ADR) (NYSE:GSK), CVS Caremark Corporation (NYSE:CVS), and AbbVie Inc (NYSE:ABBV) to get a better sense of its popularity.

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Hedge fund activity in McDonald’s Corporation (NYSE:MCD)

HedgeFundSentimentChart

At the end of the third quarter, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 13% drop from one quarter earlier. Of the funds tracked by Insider Monkey, Jonathon Jacobson’s Highfields Capital Management has the largest call position in McDonald’s Corporation (NYSE:MCD), worth close to $583.3 million, accounting for 5.5% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, founded by David E. Shaw, holding a $545.9 million position. Other professional money managers with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management, and Israel Englander’s Millennium Management.