Domino’s Pizza, Inc. (NYSE:DPZ) on Thursday reported net income of $45.9 million, or diluted EPS of $0.81, beating the Wall Street expectation of $0.79 per share. The reported diluted EPS is up by 20.9% year-over-year. Revenues were reported to be $488.62 million, up by 8.5% for the second quarter versus the prior year period, boosted by increased domestic same-store sales and store count growth, leading to increased franchised stores royalties and revenues at company-owned locations. Analysts were expecting $489.39 million in revenues for the just-ended quarter. The firm also highlighted its 6.7% same-store sales growth for the quarter, making the second quarter of 2015 the 86th consecutive quarter of international same-store sales growth. Meanwhile, domestic same-store sales grew by a healthy 12.8% year-over-year.
“It was simply another great quarter. Our franchisees and corporate team members are executing at a very high level, and our digital initiatives continue to help attract more customers around the world. We’re in a great place as a brand,” J. Patrick Doyle, Domino’s President and Chief Executive Officer, said in a statement. The firm also announced that the board of the company has declared a $0.31 per share dividend to shareholders on record as of September 15, to be paid by September 30. Domino’s Pizza, Inc. (NYSE:DPZ) added that it gave back approximately $68.1 million to shareholders in the quarter, buying back 637,587 shares. Shares are trading down by less than 1% in pre-market trading this morning.
Nonetheless, it appears that the smart money is moving away from Domino’s Pizza, Inc. (NYSE:DPZ). The total value of holdings of funds long in the stock on March 31 had decreased by 3.53% compared to the prior quarter, down to $975.14 million. This decline is amplified by the fact that the firm’s shares grew by 6.77% in the first three months of the year. Year-to-date, the stock has climbed by nearly 25%, while over the last year, the growth has been an even more impressive 61.21%. Furthermore, at the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by three from the previous quarter.
Professional investors spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, while their returns have been strong the past two years, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012. A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 139% and beaten the market by more than 80 percentage points since then (see the details).
We also track insider moves comprised of sales or purchases of shares. This give us an idea about the sentiment of executives and other insiders in their companies. Domino’s Pizza insiders have not made any purchases this year. The latest sale was by President Russel Wiener, who sold 59,160 shares in two transactions on June 26.
Taking this into consideration, let’s check out the fresh hedge fund activity concerning Domino’s Pizza, Inc.
How are hedge funds trading Domino’s Pizza, Inc. (NYSE:DPZ)?
According to hedge fund experts at Insider Monkey, Jim Simons‘ Renaissance Technologies had the largest position in Domino’s Pizza, Inc. (NYSE:DPZ) on March 31, owning 3.45 million shares worth close to $346.8 million, amounting to 0.7% of its total 13F portfolio. The second-largest stake is held by Cedar Rock Capital, led by Andy Brown, holding a $218.1 million position in 2.17 million shares; 5.8% of its 13F portfolio was allocated to the stock. additional peers that are bullish comprise Ken Fisher’s Fisher Asset Management, Richard Chilton’s Chilton Investment Company, and Cliff Asness’ AQR Capital Management.
Because Domino’s Pizza, Inc. (NYSE:DPZ) has faced declining sentiment from the smart money, logic holds that there were a few hedge funds who sold off their positions entirely in the first quarter. Interestingly, Aaron Cowen‘s Suvretta Capital Management dumped the biggest investment of all the hedgies monitored by Insider Monkey, selling 293,200 shares worth about $27.61 million. Mark Massey of AltaRock Partners was right behind this move, as the fund said goodbye to 76,498 shares worth about $7.2 million worth.
Since the world’s top money managers are moving away from Domino’s Pizza, Inc. (NYSE:DPZ), we don’t advise going long in the stock at the moment.
Disclosure: None
