8 Restaurant Stocks Most Loved By Hedge Funds

by: Insider Monkey

Insider Monkey keeps its eyes on hedge fund managers because they’re the smartest investors around. They take into account risks as well as potential returns when making decisions. They evaluate the intrinsic value of stocks with well functioning models and strategies. They utilize massive amounts of research and data to follow and forecast the trends. Our research has shown that individuals are more likely to beat the market by imitating insiders and hedge funds’ top stock picks than trading against them. Insider Monkey tracks nearly 350 hedge funds. We present a list of top 8 restaurant stocks that hedge funds were holding in their portfolios at the end of third quarter.



No. of Hedge Funds

McDonald's Corporation



Starbucks Corporation



Yum! Brands, Inc.



Wendy's Company



Chipotle Mexican Grill, Inc.



Darden Restaurants, Inc.



Panera Bread Company



Tim Hortons Inc.



Here's a brief rundown of the top 8 stocks:

1. McDonald's Corporation (NYSE:MCD): Ranking as the most popular restaurant stock among the hedge funds we follow - MCD is also one of the sky walkers this year. The stock has returned 35% year to date and was owned by 39 hedge funds at the end of the third quarter. Jim Simons’ Renaissance Technologies, which was the largest owner of MCD, increased its position by 25% and had slightly more than 3 million shares in the stock as of the end of September (see billionaire Jim Simons’ favorite stocks).

2. Starbucks Corporation (NASDAQ:SBUX): Strongly performed in 2011, SBUX was in the portfolios of 36 hedge funds and has returned 43% year to date. Donald Chiboucis’ Columbus Circle Investors held more shares than any other hedge funds. At the end of September, the firm possessed more than 6 million shares of SBUX. This figure was after the firm decreased its position by 3%.

3. Yum! Brands, Inc. (NYSE:YUM): Thirty five hedge funds had YUM in their portfolios in the third quarter. The stock gained 22% year to date. Among the hedge funds we track, YUM’s biggest stakeholder was Mason Hawkins’ Southeastern Asset Management. The firm decreased its position by 29%. After that it still had more than 18 million shares in the stock.

4. Wendy's Co. (NYSE:WEN): Wendy’s was in 22 hedge funds’ portfolios during the third quarter. The stock managed to beat the S&P and returned 18% so far. Nelson Peltz had the most shares in the stock among the hedge funds we follow. This is after the firm initiated a 76 million shares position.

5. Chipotle Mexican Grill, Inc. (NYSE:CMG): CMG is the best performed stock here, gaining 56% so far in 2011. Twenty hedge funds held the stock in Q3 and the biggest owner was Jim Simons’ Renaissance Technologies. The firm had about 811 thousand shares, up 33% from Q2.

6. Darden Restaurants, Inc. (NYSE:DRI): DRI slightly underperformed the S&P 500 index so far in 2011 and was owned by eleven hedge funds at the end of September. Alexander Mitchell’s Scopus Asset Management ranked as DRI’s biggest stakeholder among the hedge funds we track. The firm initiated a new position of exactly 500 thousand shares of DRI during the third quarter. Jeffrey Vinik and Cliff Asness were also among DRI’s large stakeholders (see Jeffrey Vinik’s top stock picks).

7. Panera Bread Company (NASDAQ:PNRA): PNRA skyrocketed recently and returned 36% year to date. Thirteen hedge funds held this stock in the third quarter. Jim Simons’ Renaissance Technologies had the most. The firm had 640 thousand shares at the end of September, after a 9% decrease.

8. Tim Hortons Inc. (THI): THI has returned 20% year to date. In the third quarter the stock was owned by 9 hedge funds, with comparatively smaller positions. D. E. Shaw had more shares than any other hedge funds, with 195 thousand shares, down 1% from Q2 (see David Shaw’s favorite stocks).

Overall, seven stocks out of eight showed strong positive results. As a group, their average year to date return is 29%, which clearly beats the market.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.