Here’s Why Yum China Holdings (YUMC) Declined in Q4
Baron Funds, an investment management company, released its “Baron Emerging Markets Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund returned 6.81% (Institutional Shares), compared to a 7.86% return for its principal benchmark, the MSCI EM Index, and a 7.72% return for the MSCI EM IMI Growth Index (the Proxy Benchmark). The fund appreciated 8.29% for the full year, the benchmark returned 9.83%, and the Proxy Benchmark gained 8.09%. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Emerging Markets Fund featured stocks such as Yum China Holdings, Inc. (NYSE:YUMC) in the fourth quarter 2023 investor letter. Headquartered in Shanghai, the People’s Republic of China, Yum China Holdings, Inc. (NYSE:YUMC) owns and operates restaurants. On February 21, 2024, Yum China Holdings, Inc. (NYSE:YUMC) stock closed at $41.60 per share. One-month return of Yum China Holdings, Inc. (NYSE:YUMC) was 16.72%, and its shares lost 30.95% of their value over the last 52 weeks. Yum China Holdings, Inc. (NYSE:YUMC) has a market capitalization of $16.741 billion.
Baron Emerging Markets Fund stated the following regarding Yum China Holdings, Inc. (NYSE:YUMC) in its fourth quarter 2023 investor letter:
"Yum China Holdings, Inc. (NYSE:YUMC) is the master franchisee for the YUM brands in China and operator of the KFC and Pizza Hut restaurant networks in that market. Shares detracted after the company reported a negative surprise on margins for the third quarter and hinted that increased competition and cost-consciousness among Chinese consumers could cause that margin compression to continue through the first quarter of 2024. Although in-year margins are volatile at Yum China, its pristine balance sheet, cumulative investments in technology, unmatched scale, and successful pivot to higher-ROI, smaller footprint stores in recent years should drive continued 8% to 10% store growth at attractive returns. Further, given its strong free-cash-flow generation and strong balance sheet, we believe the company is likely to offer capital returns to shareholders in excess of earnings over the next several years. We remain shareholders."
The iconic yellow and red roof of a franchise restaurant in the bustling streets of a city.
Yum China Holdings, Inc. (NYSE:YUMC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Yum China Holdings, Inc. (NYSE:YUMC) was held by 22 hedge fund portfolios, down from 29 in the previous quarter, according to our database.
We discussed Yum China Holdings, Inc. (NYSE:YUMC) in another article and shared the list of stocks with 50% upside potential according to analysts. In addition, please check out our hedge fund investor letters Q4 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.
