Hedge Funds Are Crazy About Darden Restaurants, Inc. (DRI)
To many of your peers, hedge funds are assumed to be delayed, old financial tools of a forgotten age. Although there are more than 8,000 hedge funds in operation in present day, Insider Monkey focuses on the leaders of this group, about 525 funds. It is widely held that this group oversees most of all hedge funds' total capital, and by watching their highest performing investments, we've brought to light a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Equally as necessary, bullish insider trading sentiment is a second way to analyze the stock market universe. There are lots of incentives for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this strategy if "monkeys" understand where to look (learn more here).
Now that that's out of the way, it's important to discuss the newest info surrounding Darden Restaurants, Inc. (NYSE:DRI).
How have hedgies been trading Darden Restaurants, Inc. (NYSE:DRI)?
At Q2's end, a total of 21 of the hedge funds we track were long in this stock, a change of 17% from the first quarter. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably.
When using filings from the hedgies we track, Israel Englander's Millennium Management had the most valuable position in Darden Restaurants, Inc. (NYSE:DRI), worth close to $67.2 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $50 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Eric Bannasch's Cadian Capital, and Dmitry Balyasny's Balyasny Asset Management.
As one would understandably expect, particular hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, created the largest position in Darden Restaurants, Inc. (NYSE:DRI). Millennium Management had 67.2 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $50 million position during the quarter. The other funds with new positions in the stock are Eric Bannasch's Cadian Capital, D. E. Shaw's D E Shaw, and Dmitry Balyasny's Balyasny Asset Management.
How are insiders trading Darden Restaurants, Inc. (NYSE:DRI)?
Insider buying made by high-level executives is at its handiest when the company in focus has seen transactions within the past 180 days. Over the latest six-month time frame, Darden Restaurants, Inc. (NYSE:DRI) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also review the relationship between both of these indicators in other stocks similar to Darden Restaurants, Inc. (NYSE:DRI). These stocks are Domino's Pizza, Inc. (NYSE:DPZ), Dunkin Brands Group Inc (NASDAQ:DNKN), Chipotle Mexican Grill, Inc. (NYSE:CMG), Tim Hortons Inc. (USA) (NYSE:THI), and Burger King Worldwide Inc (NYSE:BKW). All of these stocks are in the restaurants industry and their market caps resemble DRI's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Domino's Pizza, Inc. (NYSE:DPZ)
Dunkin Brands Group Inc (NASDAQ:DNKN)
Chipotle Mexican Grill, Inc. (NYSE:CMG)
Tim Hortons Inc. (USA) (NYSE:THI)
Burger King Worldwide Inc (NYSE:BKW)
Using the returns shown by Insider Monkey's strategies, regular investors must always watch hedge fund and insider trading sentiment, and Darden Restaurants, Inc. (NYSE:DRI) applies perfectly to this mantra.