One of the great maxims of traders and Wall Street pros is to follow the "smart money."

I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.

Next up: McDonald's (NYSE: MCD). Are institutions bullish or bearish when it comes to this fast-food phenom?

Foolish facts



CAPS stars (5 max) ****
Total ratings 4,947
Percent bulls 94.5%
Percent bears 5.5%
Bullish pitches 800 out of 862
Highest rated peers Kona Grill, Country Style Cooking (Nasdaq: CCSC), Dreams, Inc.

Data current as of Nov. 27.

Among the Earth's population, only third-worlders don't know McDonald's, and even that's changing. Mickey D's now derives 19% of annual revenue from sales in the Asia Pacific, Middle East, and Africa region. Fools like its relative omnipresence.

"I don't like it, but I eat there sometimes. If another place were at EVERY rest stop on the highway that was as quick and recognizable, I would want its stock, too. As long as there are [truck] drivers and ghettos, there will be McDonald's," wrote All-Star investor Bobbybanana40 in August. The stock is up more than 11% since.

Other Fools like Mickey D's for its generous 3.1% dividend. No surprises there. Known as a "Dividend Aristocrat" for its long-standing record of paying dividends, management has increased its payout by an average of 27% annually over the past five years.

As an investor, I can appreciate the cushion those dividends provide. There are always bad times in investing. With McDonald's, a disappointing same-store sales report out of France proved a drag on overall results this summer.

Institutional ownership history

Top Owners





Capital Research and Management










Fidelity Investments





The Vanguard Group





State Street Global Advisors










Source: Capital IQ, a division of Standard & Poor's.
*Indicates the number of shares owned.

And yet you won't find Big Money investors complaining. If anything, they're more bullish on McDonald's today than they were before the recession.

Growth may help to explain why. New menu items (e.g., the return of the McRib) and an increasing appetite for its offerings in emerging markets has convinced Wall Street that the company will grow earnings by more than 10% annually over the next five years.

Competitor and peer checkup


Institutional Ownership

Insider Ownership

Country Style Cooking 5.44% 51.63%
Domino's Pizza (NYSE: DPZ) 69.19% 2.45%
McDonald's 71.58% 0.09%
Tim Horton's (NYSE: THI) 71.86% 0.49%
Wendy's/Arby's Group (NYSE: WEN) 52.40% 2.31%

Source: Capital IQ, a division of Standard & Poor's. Data current as of Nov. 27.

Here's where the story gets both interesting -- and depressing. McDonald's ownership profile is neither bad nor good; it's just vastly inferior to peers.

Among the domestic chains, Wendy's/Arby's is just 52% owned by institutions. They could easily buy more and push the stock higher. And with insiders still owning more than 2% of the business, they've got ample financial incentive to either implement a turnaround, or broker a sale to a suitor.

Among international peers, China's fast-growing Country Style Cooking is proving that locals appreciate a good quick-serve option. Institutions own less than 6% of the outstanding shares. Once they start buying -- and I believe they will -- the stock should take off.

I'd be willing to buy either stock before buying McDonald's. But that doesn't mean Mickey D's is a bad stock or a bad buy. A mixture of dividend and international growth should create returns over time, though they may come at a slower pace than some investors would like.

Now it's your turn to weigh in. Do you like McDonald's at current prices? Let us know what you think using the comments box below. You can also recommend other stocks for me to evaluate by sending me an email, or replying to me on Twitter.

Interested in more info on McDonald's? Add it to your watchlist by clicking here.

BlackRock is a Motley Fool Inside Value pick. Country Style Cooking is a Motley Fool Rule Breakers recommendation. Tim Horton's is a Motley Fool Global Gains pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Domino's Pizza and is also on Twitter as @TheMotleyFool. Its disclosure policy is smarter than the average bear.