Do Hedge Funds Love Yum! Brands, Inc. (YUM)?

After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Yum! Brands, Inc. (NYSE:YUM).

Yum! Brands, Inc. (NYSE:YUM) was in 65 hedge funds’ portfolios at the end of the third quarter of 2015. YUM investors should be aware of an increase in enthusiasm from smart money in recent months. There were 59 hedge funds in our database with YUM holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Avago Technologies Ltd (NASDAQ:AVGO), Prudential Financial Inc (NYSE:PRU), and General Mills, Inc. (NYSE:GIS) to gather more data points.

If you’d ask most investors, hedge funds are viewed as worthless, old financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, We hone in on the leaders of this group, approximately 700 funds. It is estimated that this group of investors control most of the hedge fund industry’s total asset base, and by monitoring their matchless picks, Insider Monkey has determined various investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s go over the fresh action regarding Yum! Brands, Inc. (NYSE:YUM).

How are hedge funds trading Yum! Brands, Inc. (NYSE:YUM)?

At the end of the third quarter, a total of 65 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 10% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Keith Meister’s Corvex Capital has the most valuable position in Yum! Brands, Inc. (NYSE:YUM), worth close to $1.6 billion, comprising 18.8% of its total 13F portfolio. Sitting at the No. 2 spot is Dan Loeb of Third Point, with a $927.4 million position; 8.7% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions comprise Doug Silverman and Alexander Klabin’s Senator Investment Group, J Kevin Kenny Jr’s Emerging Sovereign Group and James Dinan’s York Capital Management.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Eminence Capital, managed by Ricky Sandler, created the largest position in Yum! Brands, Inc. (NYSE:YUM). According to its latest 13F filing, the fund had $115 million invested in the company at the end of the quarter. James Dinan’s York Capital Management also made a $113.3 million investment in the stock during the quarter. The other funds with brand new YUM positions are Rob Citrone’s Discovery Capital Management, Robert Pohly’s Samlyn Capital, and Rob Citrone’s Discovery Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Yum! Brands, Inc. (NYSE:YUM). These stocks are Avago Technologies Ltd (NASDAQ:AVGO), Prudential Financial Inc (NYSE:PRU), General Mills, Inc. (NYSE:GIS), and ACE Limited (NYSE:ACE). This group of stocks’ market values are similar to YUM’s market value.

As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $1.78 billion. That figure was a whooping $5.05 billion in YUM’s case. Avago Technologies Ltd (NASDAQ:AVGO) is the most popular stock in this table. On the other hand General Mills, Inc. (NYSE:GIS) is the least popular one with only 30 bullish hedge fund positions. Yum! Brands, Inc. (NYSE:YUM) is not far behind Avago Technologies and, given the fact that it has attracted the biggest amount of the hedge funds’ money, we believe it could also be a good candidate for a long position. Further research is, however, necessary to find out whether any of the two stocks are worth adding to your portfolio.