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Should You Buy Domino’s Pizza, Inc. (DPZ)?

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Is Domino’s a buy?

In the eyes of many market players, hedge funds are viewed as bloated, outdated financial tools of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open in present day, this site looks at the elite of this group, close to 525 funds. Analysts calculate that this group controls the majority of all hedge funds’ total assets, and by watching their best picks, we’ve unsheathed a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Domino's Pizza, Inc. (NYSE:DPZ)

Just as useful, positive insider trading sentiment is another way to analyze the marketplace. As the old adage goes: there are many incentives for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if shareholders understand where to look (learn more here).

Thus, it’s important to study the latest info about Domino’s Pizza, Inc. (NYSE:DPZ).

How are hedge funds trading Domino’s Pizza, Inc. (NYSE:DPZ)?

At Q2’s end, a total of 25 of the hedge funds we track were bullish in this stock, a change of 9% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially.

Out of the hedge funds we follow, Jim Simons’s Renaissance Technologies had the most valuable position in Domino’s Pizza, Inc. (NYSE:DPZ), worth close to $164.5 million, comprising 0.4% of its total 13F portfolio. The second largest stake is held by Scout Capital Management, managed by James Crichton and Adam Weiss, which held a $153.1 million position; 2.5% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Ken Fisher’s Fisher Asset Management, Donald Chiboucis’s Columbus Circle Investors and Richard Chilton’s Chilton Investment Company.

With a general bullishness amongst the titans, particular hedge funds have jumped into Domino’s Pizza, Inc. (NYSE:DPZ) headfirst. Renaissance Technologies, managed by Jim Simons, assembled the largest position in Domino’s Pizza, Inc. (NYSE:DPZ). Renaissance Technologies had 164.5 million invested in the company at the end of the quarter. James Crichton and Adam Weiss’s Scout Capital Management also initiated a $153.1 million position during the quarter. The other funds with new positions in the stock are Ken Fisher’s Fisher Asset Management, Donald Chiboucis’s Columbus Circle Investors, and Richard Chilton’s Chilton Investment Company.

What have insiders been doing with Domino’s Pizza, Inc. (NYSE:DPZ)?

Legal insider trading, particularly when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time frame, Domino’s Pizza, Inc. (NYSE:DPZ) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Domino’s Pizza, Inc. (NYSE:DPZ). These stocks are Dunkin Brands Group Inc (NASDAQ:DNKN), Bloomin’ Brands Inc (NASDAQ:BLMN), The Wendy’s Company (NASDAQ:WEN), Brinker International, Inc. (NYSE:EAT), and Arcos Dorados Holding Inc (NYSE:ARCO). This group of stocks are the members of the restaurants industry and their market caps are closest to DPZ’s market cap.

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