Yum! Brands, Inc. (NYSE:YUM) was in 31 hedge funds’ portfolio at the end of the fourth quarter of 2012. YUM investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 35 hedge funds in our database with YUM positions at the end of the previous quarter. This is important to note, as Yum! Brands saw its estimates cut at UBS earlier this morning.
Credit: Yum! Brands, Inc. (NYSE:YUM)
To most investors, hedge funds are assumed to be slow, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey hone in on the leaders of this club, close to 450 funds. It is estimated that this group has its hands on most of the hedge fund industry’s total asset base, and by keeping an eye on their best picks, we have brought to light a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 24 percentage points in 7 months (see all of our picks from August).
Just as beneficial, positive insider trading sentiment is a second way to parse down the financial markets. Obviously, there are plenty of reasons for an executive to downsize shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this method if investors know what to do (learn more here).
Consequently, let’s take a peek at the recent action regarding Yum! Brands, Inc. (NYSE:YUM).
What does the smart money think about Yum! Brands, Inc. (NYSE:YUM)?
At the end of the fourth quarter, a total of 31 of the hedge funds we track were long in this stock, a change of -11% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably.
When looking at the hedgies we track, Robert Karr’s Joho Capital had the largest position in Yum! Brands, Inc. (NYSE:YUM), worth close to $70.5 million, comprising 9.3% of its total 13F portfolio. On Joho Capital’s heels is Columbus Circle Investors, managed by Donald Chiboucis, which held a $70.2 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Richard Chilton’s Chilton Investment Company, Christopher R. Hansen’s Valiant Capital and Phill Gross and Robert Atchinson’s Adage Capital Management.
Because Yum! Brands, Inc. (NYSE:YUM) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers who sold off their entire stakes at the end of the year. At the top of the heap, Michael Karsch’s Karsch Capital Management said goodbye to the largest investment of the “upper crust” of funds we key on, worth close to $11.2 million in stock.. Rob Citrone’s fund, Discovery Capital Management, also dropped its stock, about $9.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds at the end of the year.
What have insiders been doing with Yum! Brands, Inc. (NYSE:YUM)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time period, Yum! Brands, Inc. (NYSE:YUM) has seen 1 unique insiders buying, and 10 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Yum! Brands, Inc. (NYSE:YUM). These stocks are Darden Restaurants, Inc. (NYSE:DRI), Burger King Worldwide Inc (NYSE:BKW), Tim Hortons Inc. (USA) (NYSE:THI), Chipotle Mexican Grill, Inc. (NYSE:CMG), and McDonald’s Corporation (NYSE:MCD). This group of stocks belong to the restaurants industry and their market caps match YUM’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Darden Restaurants, Inc. (NYSE:DRI)||18||1||2|
|Burger King Worldwide Inc (NYSE:BKW)||10||0||0|
|Tim Hortons Inc. (USA) (NYSE:THI)||9||0||0|
|Chipotle Mexican Grill, Inc. (NYSE:CMG)||18||0||3|
|McDonald’s Corporation (NYSE:MCD)||47||1||13|
With the returns shown by the aforementioned time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Yum! Brands, Inc. (NYSE:YUM) applies perfectly to this mantra.