In this article we are going to use hedge fund sentiment as a tool and determine whether Restaurant Brands International Inc (NYSE:QSR) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is QSR a good stock to buy? Restaurant Brands International Inc (NYSE:QSR) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of September. Our calculations also showed that QSR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare QSR to other stocks including Avangrid, Inc. (NYSE:AGR), Tradeweb Markets Inc. (NASDAQ:TW), and Tyler Technologies, Inc. (NYSE:TYL) to get a better sense of its popularity.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a peek at the recent hedge fund action surrounding Restaurant Brands International Inc (NYSE:QSR).
Harold Levy of Iridian Asset Management
Do Hedge Funds Think QSR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in QSR a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Restaurant Brands International Inc (NYSE:QSR) was held by Pershing Square, which reported holding $1464.7 million worth of stock at the end of September. It was followed by Iridian Asset Management with a $102 million position. Other investors bullish on the company included Citadel Investment Group, Galibier Capital Management, and Incline Global 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 15.48% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, designating 7.58 percent of its 13F equity portfolio to QSR.
Since Restaurant Brands International Inc (NYSE:QSR) has faced falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their positions entirely in the third quarter. Interestingly, Qing Li’s Sciencast Management dumped the largest position of all the hedgies monitored by Insider Monkey, totaling about $1.2 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund sold off about $0.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Restaurant Brands International Inc (NYSE:QSR) but similarly valued. We will take a look at Avangrid, Inc. (NYSE:AGR), Tradeweb Markets Inc. (NASDAQ:TW), Tyler Technologies, Inc. (NYSE:TYL), Hologic, Inc. (NASDAQ:HOLX), Ubiquiti Inc. (NYSE:UI), Seagate Technology Holdings plc (NASDAQ:STX), and Hewlett Packard Enterprise Company (NYSE:HPE). This group of stocks’ market values match QSR’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGR,9,37232,-3 TW,22,135429,7 TYL,30,772769,-3 HOLX,39,716983,-2 UI,20,240246,-3 STX,27,1806109,-4 HPE,33,1002469,-1 Average,25.7,673034,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $673 million. That figure was $1874 million in QSR’s case. Hologic, Inc. (NASDAQ:HOLX) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 9 bullish hedge fund positions. Restaurant Brands International Inc (NYSE:QSR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for QSR is 37.9. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately QSR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); QSR investors were disappointed as the stock returned 0.1% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Get real-time email alerts: Follow Restaurant Brands International Inc. (NYSE:QSR)
Disclosure: None. This article was originally published at Insider Monkey.