We analyze hundreds of 13F filings from hedge funds and other notable investors to develop investment strategies and provide other useful information to investors. For example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year (learn more about our small cap strategy). We can also use our database to find which are the most popular stocks among hedge funds in different industries. Throughout the relatively weak recovery, U.S. restaurants- particularly quick service restaurants- have been one bright spot with significant increases in employment. Based on the number of filers we track in our database which were long the stock, here are the ten most popular restaurant stocks among hedge funds:
McDonald’s Corporation (NYSE:MCD) barely edged out Starbucks Corporation (NASDAQ:SBUX) to keep its place as the most popular restaurant stock among hedge funds with 47 filers in our database reporting a position. McDonalds offers a dividend yield above 3% though the company’s growth has been only modest and the trailing earnings multiple is in the high teens. The Bill and Melinda Gates Foundation Trust owned 9.9 million shares of McDonalds at the end of December (see what else the trust is invested in).
46 hedge funds and other notable investors we track owned shares of Starbucks, up from 43 at the end of September. Billionaire Steve Cohen’s SAC Capital Advisors more than doubled the size of its position in Starbucks in the fourth quarter of 2012 (find Cohen’s favorite stocks). Starbucks, despite its near ubiquity in many U.S. cities, is planning continued expansion and has been recording solid growth numbers.
A few hedge funds sold out of Yum! Brands, Inc. (NYSE:YUM), with 31 of them being long at the end of 2012. Chilton Investment Company, managed by Richard Chilton, was bucking the more general trend and actually bought shares of Yum last quarter (check out Chilton’s stock picks).
Upscale quick service restaurants are apparently popular: hedge fund ownership of Panera Bread Co (NASDAQ:PNRA) was increasing as well as of Starbucks. Renaissance Technologies, whose success has made founder Jim Simons a multi-billionaire, was the largest holder of the stock in our database (research more stocks Renaissance likes).
Ownership of Dunkin Brands Group Inc (NASDAQ:DNKN) plunged from 30 filers at the beginning of October to 20 in this round of 13Fs as many investors lost confidence in the expanding company. Billionaire George Soros, for example, sold all of his shares in Dunkin (find out what other stocks Soros has been trading).
Find out which restaurant tumbled from 5th to 7th place in popularity among hedge funds: