Hedge Funds Are Selling Domino’s Pizza, Inc. (DPZ)
The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Domino's Pizza, Inc. (NYSE:DPZ).
Is Domino's Pizza, Inc. (NYSE:DPZ) a bargain? The best stock pickers are turning less bullish. The number of long hedge fund bets retreated by 5 in recent months. Our calculations also showed that DPZ isn't among the 30 most popular stocks among hedge funds (view the video below). DPZ was in 27 hedge funds' portfolios at the end of the second quarter of 2019. There were 32 hedge funds in our database with DPZ holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most traders, hedge funds are perceived as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at the moment, We look at the aristocrats of this club, approximately 750 funds. These money managers have their hands on most of the hedge fund industry's total asset base, and by paying attention to their inimitable investments, Insider Monkey has brought to light numerous investment strategies that have historically outperformed the broader indices. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a peek at the key hedge fund action regarding Domino's Pizza, Inc. (NYSE:DPZ).
How have hedgies been trading Domino's Pizza, Inc. (NYSE:DPZ)?
Heading into the third quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the first quarter of 2019. On the other hand, there were a total of 26 hedge funds with a bullish position in DPZ a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the biggest position in Domino's Pizza, Inc. (NYSE:DPZ). Renaissance Technologies has a $648.4 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Lone Pine Capital, managed by Stephen Mandel, which holds a $347.1 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise Ken Fisher's Fisher Asset Management, Ken Griffin's Citadel Investment Group and Gabriel Plotkin's Melvin Capital Management.
Seeing as Domino's Pizza, Inc. (NYSE:DPZ) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few money managers that slashed their positions entirely last quarter. Intriguingly, Chase Coleman's Tiger Global Management LLC sold off the largest stake of the "upper crust" of funds followed by Insider Monkey, valued at close to $316.1 million in stock. Bruce Emery's fund, Greenvale Capital, also cut its stock, about $23.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 5 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Domino's Pizza, Inc. (NYSE:DPZ). We will take a look at The AES Corporation (NYSE:AES), TechnipFMC plc (NYSE:FTI), Fidelity National Financial Inc (NYSE:FNF), and FactSet Research Systems Inc. (NYSE:FDS). This group of stocks' market valuations resemble DPZ's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AES,27,503849,3 FTI,25,863411,0 FNF,29,326008,-1 FDS,19,345992,1 Average,25,509815,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $510 million. That figure was $1763 million in DPZ's case. Fidelity National Financial Inc (NYSE:FNF) is the most popular stock in this table. On the other hand FactSet Research Systems Inc. (NYSE:FDS) is the least popular one with only 19 bullish hedge fund positions. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately DPZ wasn't nearly as popular as these 20 stocks and hedge funds that were betting on DPZ were disappointed as the stock returned -11.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
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