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Hedge Funds Like These Trending Stocks But Upside May Be Limited

Domino’s Pizza, Inc. (NYSE:DPZ) and International Speedway Corp (NASDAQ:ISCA) both reported earnings this morning. Domino’s Pizza missed revenue and earnings expectations and is down by 4.5% in pre-market trading, while International Speedway Corp beat revenue and earnings expectations and is unchanged in the pre-market session. Let’s take a closer look at their earnings reports and examine what the smart money thinks of the two companies.

France Pizza

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For its third quarter, Domino’s Pizza, Inc. (NYSE:DPZ) earned $0.67 per share on revenues of $484.7 million, missing earnings expectations of $0.74 per share on revenues of $487.05 million. Domestic same-store sales increased by 10.5%, while international same-store sales increased by 7.7%. The company added 194 stores to its total in the quarter and repurchased 365,460 shares. Operating margin declined by 0.6% to 29.3%.

While the third quarter results led to a bad earnings report, one weak quarter isn’t exactly cause for alarm. A little consolidation would be healthy for the stock. Domino’s Pizza has had a good run from its 2010 base as the U.S consumer bounces back. The stock trades at a relatively high forward P/E of 26.89 and could take a few quarters to grow into its valuation, however.

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Our data shows that hedge funds were bullish on Domino’s Pizza, Inc. (NYSE:DPZ) in the second quarter. Of the 730 elite funds that we track, 23 reported holding stakes in Domino’s worth $1.18 billion as of June 30, representing 18.80% of the float, versus 22 funds and $975.14 million a quarter earlier. Jim Simons‘ Renaissance Technologies decreased its position by 4% to 3.34 million shares while Dmitry Balyasny’s Balyasny Asset Management increased its stake by 134% to 437,380 shares. Cliff Asness’ AQR Capital Management raised its holding by 6% to 395,977 shares.

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