The SEC requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have compiled an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Domino’s Pizza, Inc. (NYSE:DPZ) based on those filings.
Overall, Domino’s Pizza, Inc. (NYSE:DPZ) shares haven’t seen a lot of action during the third quarter. The hedge fund sentiment was unchanged and the stock was included in the equity portfolios of 33 funds tracked by us at the end of September. However, 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 News Corp (NASDAQ:NWSA), AerCap Holdings N.V. (NYSE:AER), and American Capital Agency Corp. (NASDAQ:AGNC) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to view the key action regarding Domino’s Pizza, Inc. (NYSE:DPZ).
How are hedge funds trading Domino’s Pizza, Inc. (NYSE:DPZ)?
As mentioned previously, a total of 33 funds tracked by Insider Monkey were bullish on Domino’s Pizza at the end of September, unchanged over the quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, led by Ken Fisher, holds the biggest position in Domino’s Pizza, Inc. (NYSE:DPZ). Fisher Asset Management has a $224.8 million position in the stock, comprising 0.4% of its 13F portfolio. On Fisher Asset Management’s heels is Jim Simons’ Renaissance Technologies, which holds a $216.3 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism consist of Paul Marshall and Ian Wace’s Marshall Wace LLP, Gabriel Plotkin’s Melvin Capital Management, and Richard Chilton’s Chilton Investment Company.
On the other hand, a number of funds decided to close their entire stakes in Domino’s Pizza during the third quarter. At the top of the heap, Josh Resnick’s Jericho Capital Asset Management cut the biggest position of the 700 funds monitored by Insider Monkey, comprising an estimated $22.6 million in stock, and Matthew Knauer and Mina Faltas’s Nokota Management was right behind this move, as the fund said goodbye to about $20.1 million worth of shares.
Let’s also examine hedge fund activity in other stocks similar to Domino’s Pizza, Inc. (NYSE:DPZ). These stocks are News Corp (NASDAQ:NWSA), AerCap Holdings N.V. (NYSE:AER), American Capital Agency Corp. (NASDAQ:AGNC), and Vipshop Holdings Ltd – ADR (NYSE:VIPS). This group of stocks’ market valuations are similar to DPZ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NWSA | 33 | 1020494 | -2 |
| AER | 32 | 1377736 | -4 |
| AGNC | 11 | 154784 | -8 |
| VIPS | 38 | 935685 | 13 |
As you can see these stocks had an average of 29 investors with bullish positions and the average amount invested in these stocks was $872 million, which is lower than the $1.07 billion figure in DPZ’s case. Vipshop Holdings Ltd – ADR (NYSE:VIPS) is the most popular stock in this table. On the other hand American Capital Agency Corp. (NASDAQ:AGNC) is the least popular one with only 11 funds reporting ownership of its stock. Domino’s Pizza, Inc. (NYSE:DPZ) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Vipshop Holdings Ltd – ADR (NYSE:VIPS) might be a better candidate to consider a long position.
