Five Fast-Food Stocks Hedge Funds Are Bullish On

#3 Yum! Brands, Inc. (NYSE:YUM)

 – Number of Hedge Fund Shareholders (as of March 31): 51
– Total Value of Hedge Funds’ Holdings (as of March 31): $4.71 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 14.10%

Although Yum! Brands, Inc. (NYSE:YUM) is planning to spin off its Chinese operations by the end of the year, it looks less likely that the Chinese sovereign wealth fund will buy a major stake in the spin-off. According to the Daily Mail, the sovereign wealth fund, along with KKR, have ended talks to buy part of the spin-off due to Yum wanting to keep majority control of the business for tax reasons. Keeping control of some of the business might be a smart move in the long run, as China’s population is huge and its economy will eventually recover. To appease shareholders, Yum announced an authorization of up to $4.2 billion in share repurchases in May.

#2 Starbucks Corporation (NASDAQ:SBUX)

 – Number of Hedge Fund Shareholders (as of March 31): 52
– Total Value of Hedge Funds’ Holdings (as of March 31): $1.52 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 1.70%

Starbucks Corporation (NASDAQ:SBUX) earned $0.39 per share for its second quarter of fiscal year 2016, in-line with expectations. Revenue jumped by 9.4% year-over-year as global comparable-store sales rose by 6%. China remains a bright spot for the company despite its slowing economy. Starbucks’ sales in the country rose by 18% year-over-year during the fiscal quarter. Management expects full fiscal year 2016 EPS of $1.88-to-$1.89 per share.  Although shares of Starbucks aren’t cheap, Starbucks’ management executes very well and the company has a lot of growth ahead of it. 52 elite funds owned shares of Starbucks at the end of March, down by nine funds from the end of 2015.

#1 McDonald’s Corporation (NYSE:MCD)

 – Number of Hedge Fund Shareholders (as of March 31): 83
– Total Value of Hedge Funds’ Holdings (as of March 31): $4 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 3.50%

After reporting excellent fourth quarter results, McDonald’s Corporation (NYSE:MCD) delivered another solid performance in the first quarter. For the first three months of the year, McDonald’s earned $1.23 per share on sales of $5.90 billion, beating profit estimates of $1.16 per share and revenue expectations of $5.82 billion. Global comparable-store sales rose by 6.2% year-over- year while U.S first quarter comparable-store sales increased by 5.4%. Operating income rose by 15% for the quarter and McDonald’s returned $4.5 billion back to shareholders through share repurchases and dividend payments. 83 elite funds in our system held shares of McDonald’s at the end of the first quarter, ranking it as the most popular quick-service restaurant among them by a wide margin.

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