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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Yum China Holdings, Inc. (NYSE:YUMC) based on that data.
Yum China Holdings, Inc. (NYSE:YUMC) has experienced a decrease in hedge fund sentiment recently. Yum China Holdings, Inc. (NYSE:YUMC) was in 32 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that YUMC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Kerr Neilson of Platinum Asset Management
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Do Hedge Funds Think YUMC Is A Good Stock To Buy Now?
At Q2's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. By comparison, 35 hedge funds held shares or bullish call options in YUMC a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, 0 was the largest shareholder of Yum China Holdings, Inc. (NYSE:YUMC), with a stake worth $461 million reported as of the end of June. Trailing GuardCap Asset Management was Tremblant Capital, which amassed a stake valued at $103.4 million. Antipodes Partners, Platinum Asset Management, and Tiger Pacific 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 Tiger Pacific Capital allocated the biggest weight to Yum China Holdings, Inc. (NYSE:YUMC), around 6.82% of its 13F portfolio. GuardCap Asset Management is also relatively very bullish on the stock, designating 6.65 percent of its 13F equity portfolio to YUMC.
Since Yum China Holdings, Inc. (NYSE:YUMC) has witnessed declining sentiment from hedge fund managers, it's easy to see that there were a few money managers that decided to sell off their positions entirely heading into Q3. At the top of the heap, Hyder Ahmad's Broad Peak Investment Holdings dumped the biggest stake of the "upper crust" of funds watched by Insider Monkey, comprising close to $78.9 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also dropped its stock, about $6.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds heading into Q3.
Let's now review hedge fund activity in other stocks similar to Yum China Holdings, Inc. (NYSE:YUMC). We will take a look at Lufax Holding Ltd (NYSE:LU), Garmin Ltd. (NASDAQ:GRMN), Franco-Nevada Corporation (NYSE:FNV), Delta Air Lines, Inc. (NYSE:DAL), Arista Networks Inc (NYSE:ANET), Eversource Energy (NYSE:ES), and Interactive Brokers Group, Inc. (NASDAQ:IBKR). This group of stocks' market values resemble YUMC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LU,19,357817,10 GRMN,25,477151,2 FNV,23,959211,3 DAL,49,1218077,-1 ANET,35,318271,9 ES,26,391290,2 IBKR,36,1481835,5 Average,30.4,743379,4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $743 million. That figure was $914 million in YUMC's case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table. On the other hand Lufax Holding Ltd (NYSE:LU) is the least popular one with only 19 bullish hedge fund positions. Yum China Holdings, Inc. (NYSE:YUMC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for YUMC is 49.3. 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. 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 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately YUMC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on YUMC were disappointed as the stock returned -8% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.