We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Yum! Brands, Inc. (NYSE:YUM) and determine whether hedge funds skillfully traded this stock.
Yum! Brands, Inc. (NYSE:YUM) has experienced an increase in support from the world’s most elite money managers in recent months. Yum! Brands, Inc. (NYSE:YUM) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 65. Our calculations also showed that YUM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s review the fresh hedge fund action surrounding Yum! Brands, Inc. (NYSE:YUM).
Do Hedge Funds Think YUM Is A Good Stock To Buy Now?
At the end of September, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards YUM over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Alkeon Capital Management held the most valuable stake in Yum! Brands, Inc. (NYSE:YUM), which was worth $282.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $108.9 million worth of shares. Bridgewater Associates, Citadel Investment Group, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Masterton Capital Management allocated the biggest weight to Yum! Brands, Inc. (NYSE:YUM), around 3.13% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, earmarking 1.15 percent of its 13F equity portfolio to YUM.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Segantii Capital, managed by Simon Sadler, created the most valuable position in Yum! Brands, Inc. (NYSE:YUM). Segantii Capital had $17.1 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $11 million investment in the stock during the quarter. The other funds with brand new YUM positions are Paul Tudor Jones’s Tudor Investment Corp, Michael Gelband’s ExodusPoint Capital, and Andrew Sandler’s Sandler Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Yum! Brands, Inc. (NYSE:YUM) but similarly valued. We will take a look at Cloudflare, Inc. (NYSE:NET), Mizuho Financial Group Inc. (NYSE:MFG), Robinhood Markets Inc. (NASDAQ:HOOD), Parker-Hannifin Corporation (NYSE:PH), AutoZone, Inc. (NYSE:AZO), Unity Software Inc. (NYSE:U), and DuPont de Nemours Inc (NYSE:DD). This group of stocks’ market caps match YUM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NET | 50 | 958432 | 7 |
| MFG | 6 | 13164 | 0 |
| HOOD | 20 | 4685841 | 20 |
| PH | 39 | 1973795 | -3 |
| AZO | 35 | 1020383 | 1 |
| U | 36 | 7901507 | 7 |
| DD | 51 | 1498457 | -6 |
| Average | 33.9 | 2578797 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $2579 million. That figure was $758 million in YUM’s case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 6 bullish hedge fund positions. Yum! Brands, Inc. (NYSE:YUM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for YUM is 61.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on YUM as the stock returned 2.7% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Yum Brands Inc (NYSE:YUM)
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Disclosure: None. This article was originally published at Insider Monkey.
