Are Hedge Funds Right About Yum! Brands, Inc. (YUM)?

Do you own Yum! Brands, Inc. (NYSE:YUM)?


To the average investor, there are plenty of metrics investors can use to track publicly traded companies. Two of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a healthy margin (see just how much).


Equally as necessary, positive insider trading sentiment is a second way to look at the marketplace. Just as you'd expect, there are a variety of stimuli for an executive to cut shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).


Now that that's out of the way, we're going to study the latest info for Yum! Brands, Inc. (NYSE:YUM).


Yum! Brands, Inc. (NYSE:YUM)

What does the smart money think about Yum! Brands, Inc. (NYSE:YUM)?


At the end of the second quarter, a total of 32 of the hedge funds we track were long in this stock, a change of -6% from the previous quarter. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes substantially.


According to our 13F database, Emerging Sovereign Group, managed by J Kevin Kenny Jr, holds the biggest position in Yum! Brands, Inc. (NYSE:YUM). Emerging Sovereign Group has a $155.1 million position in the stock, comprising 6.5% of its 13F portfolio. Coming in second is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $46.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Robert Pohly's Samlyn Capital, and Sanford J. Colen's Apex Capital.


Because Yum! Brands, Inc. (NYSE:YUM) has experienced bearish sentiment from the smart money's best and brightest, we can see that there lies a certain "tier" of funds that elected to cut their entire stakes in Q1. Interestingly, Andrew J. M. Spokes's Farallon Capital dumped the biggest investment of all the hedgies we key on, valued at about $81.7 million in stock. Tony Chedraoui's fund, Tyrus Capital, also dumped its stock, about $63.3 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds in Q1.

How are insiders trading Yum! Brands, Inc. (NYSE:YUM)?


Insider buying made by high-level executives is best served when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Yum! Brands, Inc. (NYSE:YUM) has seen 1 unique insiders purchasing, and 6 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 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)
21
0
3

Burger King Worldwide Inc (NYSE:BKW)
14
0
0

Tim Hortons Inc. (USA) (NYSE:THI)
23
0
0

Chipotle Mexican Grill, Inc. (NYSE:CMG)
28
0
3

McDonald's Corporation (NYSE:MCD)
44
0
6

Using the results shown by the previously mentioned studies, regular investors should always pay attention to hedge fund and insider trading activity, and Yum! Brands, Inc. (NYSE:YUM) is no exception.


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