Cooper Investors, an investment management firm, released its “Cooper Investors Global Equities Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. The fund returned -0.48% in the third quarter, compared to a -0.37% return for the benchmark MSCI ACWI. Global stocks closed lower at quarter-end due to rising bond yields, higher energy prices, and a strong dollar, which are typically unfriendly for equities. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Cooper Investors highlighted stocks like Yum China Holdings, Inc. (NYSE:YUMC) in the third quarter 2023 investor letter. Headquartered in Shanghai, the People’s Republic of China, Yum China Holdings, Inc. (NYSE:YUMC) owns and operates restaurants. On November 1, 2023, Yum China Holdings, Inc. (NYSE:YUMC) stock closed at $44.56 per share. One-month return of Yum China Holdings, Inc. (NYSE:YUMC) was -15.08%, and its shares lost 4.74% of their value over the last 52 weeks. Yum China Holdings, Inc. (NYSE:YUMC) has a market capitalization of $18.648 billion.
Cooper Investors made the following comment about Yum China Holdings, Inc. (NYSE:YUMC) in its Q3 2023 investor letter:
“Regarding China, global investor sentiment has soured further in recent months. The implosion of the commercial real estate market hit headlines again as the founder of a large property developer was detained by police. Our experience suggests Value Latency may emerge when markets are labelled ‘uninvestable’, as China now is for many. We see this today with our investment in Yum China Holdings, Inc. (NYSE:YUMC), a consumer Stalwart that owns and operates KFC and Pizza Hut locations in the country.
Quick service restaurant chains can be great wealth creators and are favoured by investors attracted to compounders that generate enduring returns on capital. The listed players often trade on handsome premiums to market multiples which can be particularly rich earlier in the roll-out story when the business is rapidly opening new locations as well as growing same store sales. Consider Chipotle Mexican Grill, a US-listed chain of Mexican fast-food restaurants (not owned) with around 3,400 stores that has an enterprise value of US$50bn and typically trades at an implied earnings multiple in the high 30’s.
We are accustomed to consumer rollout stories in Asia trading at eye-watering valuations, yet with the negativity swirling around China today there is material Value Latency with Yum China trading on an enterprise value of ~US$20bn and a multiple of earnings ~20 times. The business operates around 13,500 stores and incremental unit economics on new stores are among the best we’ve seen globally in the QSR space, with payback periods on small formats even quicker. Management did a good job navigating the brutal COVID period. With that behind them, the future looks bright and underappreciated by the market…” (Click here to read the full text)
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Yum China Holdings, Inc. (NYSE:YUMC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Yum China Holdings, Inc. (NYSE:YUMC) at the end of second quarter which was 35 in the previous quarter.
We discussed Yum China Holdings, Inc. (NYSE:YUMC) in another article and shared the list of best Asian stocks to buy. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
