LRT Capital Management, an investment management firm, published its first-quarter 2021 investor letter – a copy of which can be downloaded here. A net return of +5.12%% was recorded by the LRT Economic Moat strategy for the Q1 of 2021, while the LRT Market Neutral strategy returned +2.4% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
LRT Capital Management, in its Q1 2021 investor letter, mentioned Domino’s Pizza, Inc. (NYSE: DPZ), and shared their insights on the company. Domino’s Pizza, Inc. is an Ann Arbor, Michigan-based restaurant company that currently has a $16.5 billion market capitalization. Since the beginning of the year, DPZ delivered a -12.60% return, while its 12-month returns are down by -13.90%. As of May 27, 2021, the stock closed at $423.97 per share.
Here is what LRT Capital Management has to say about Domino’s Pizza, Inc. in its Q1 2021 investor letter:
“Domino’s Pizza is the world’s largest franchisor of pizza restaurants with over 13,800 locations in 85 countries. Pizza sales have benefited during the Covid19 pandemic, with Q3 2020, same-store sales growing by +17.5% in the US (expected +13.9%) and +6.2% internationally (+1.9% estimated), YoY7 . Earnings were negatively impacted by lower margins due to higher costs – a trend we expect to reverse shortly. The stock is not optically cheap at 25x forward earnings, however, the company has routinely reported earnings growth of over 20% in almost all quarters since 2009. Given the company’s high growth rate, international growth opportunities, and capital light business model, which allows for returns on invested capital of over 40%, we are happy to continue to hold the shares. Shares are down 2.37% year-to-date.”
Our calculations show that Domino’s Pizza, Inc. (NYSE: DPZ) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Domino’s Pizza, Inc. was in 29 hedge fund portfolios, compared to 37 funds in the fourth quarter of 2020. DPZ delivered a 23.21% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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