Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, published its “Longleaf Partners International Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. Longleaf Partners International Fund added 1.51% in the fourth quarter versus MSCI EAFE’s return of 2.69%. For the full year, the Fund fell 0.89%, while the MSCI EAFE returned 11.26%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Longleaf Partners International Fund, in its Q4 2021 investor letter, mentioned Domino’s Pizza, Inc. (NYSE: DPZ) and discussed its stance on the firm. Domino’s Pizza, Inc. is an Ann Arbor, Michigan-based restaurant company with a $15.7 billion market capitalization. DPZ delivered a -23.41% return since the beginning of the year, while its 12-month returns are up by 25.26%. The stock closed at $432.21per share on February 28, 2022.
Here is what Longleaf Partners International Fund has to say about Domino’s Pizza, Inc. in its Q4 2021 investor letter:
“Domino’s Pizza Group PLC (DPG) (49%, 2.25%; 16%, 0.90%), the leading UK pizza delivery company, was another top contributor in the quarter and for the year. When we first invested in DPG in April 2019, we saw the opportunity to engage to help drive improvements in the company’s governance and other environmental, social and governance (ESG) considerations. After two+ years of engagement and much heavy lifting, the company now has a top-notch management team led by CEO Dominic Paul and a fully replaced board of directors that is now best-in-class on all metrics of ability, diversity, ESG priorities, capital allocation and shareholder friendliness. A tangible example of the contrast between old leadership and new leadership is the December 2021 announcement of a new agreement between DPG and the franchisees, signaling an alignment of intent and a spirit of teamwork to pursue the significant opportunity in the UK pizza space. Despite a share price compounding at 28% per year over our ownership period, the investment remains attractively priced, as our appraisal has also compounded healthily. DPG today is a technology-led company with nearly all of its orders coming over the company app and website. They are still in the early days of more effectively harnessing this data and customer knowledge to drive further wallet penetration. Recognizing the high cash generation but minimal capital intensity of the business model, management and the board have committed to buying back stock whenever it is attractive – we estimate 2-4% of shares outstanding per year – on top of paying the 2% dividend. Robust organic growth on the back of the franchisee agreement will support like-for-like sales growing at mid-single digits and potentially up to double digits, with new store openings totaling another few percent per year in growth. Coupled with systematic shrinking of the share count, the result could be sustainable double-digit to mid-teens EPS growth and a share price well above today’s level.”
Our calculations show that Domino’s Pizza, Inc. (NYSE: DPZ) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. DPZ was in 31 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 36 funds in the previous quarter. Domino’s Pizza, Inc. (NYSE: DPZ) delivered a -19.05% return in the past 3 months.
In February 2022, we also shared another hedge fund’s views on DPZ in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
