5 Best FMCG Stocks To Buy Now

The FMCG (or fast moving consumer goods) industry, also known as the packaged goods or consumer non-durables sector, is largely considered a sector that ebbs and flows with consumer confidence and the overall strength of the economy. While some companies operating in the sector, like Procter & Gamble Co (NYSE:PG), sell items considered essentials, you’ll see from the following list that many of the top-ranked companies rely on discretionary spending, which rises with the strength of the economy. In this article we’ll take a look at the top five FMCG stocks held by the elite hedge funds tracked by Insider Monkey, which should put them on the radars of every investor interested in the sector.

Whether elite hedge funds collectively like a stock or not is an important metric to consider, as these large investors show a great level of skill and expertise when it comes to picking stocks. Over the last few years equity hedge funds have trailed the market by a large margin, but that’s mostly due to their hedging and short positions, which perform poorly in a bull market. Their long positions performed far better, especially their small-cap picks, which have the potential to beat the market by 95 basis points per month on average, as our backtests showed. Our small-cap strategy involves imitating a portfolio of the 15 most popular small-cap picks among hedge funds and it has returned 118% since August 2012, beating the S&P 500 ETF (SPY) by over 60 percentage points (read more details here).

5. Dollar Tree, Inc. (NASDAQ:DLTR)

• Investors with Long Positions (as of June 30): 60
• Aggregate Value of Investors’ Holdings (as of June 30): $3.31 Billion
• Percentage of Shares Owned by Investors: 20.30%

Interest in Dollar Tree, Inc. (NASDAQ:DLTR) among the investors we track declined slightly in the second quarter, just ahead of the completion of its acquisition of Family Dollar. However, those elite funds still held 20.30% of the discount retailer’s common stock, the highest percentage on this list, though that will likely decline further in the third quarter as event-driven funds exit the stock with its merger now completed.  Dollar Tree, Inc. (NASDAQ:DLTR)’s stock took a big hit on September 1 when it released its first quarterly earnings report post-merger, which disappointed investors. Costs have risen and margins have declined as it continues to work to integrate its acquisition into its operations. Charles Akre’s Akre Capital Management and Panayotis Takis Sparaggis’ Alkeon Capital Management were the top two shareholders of Dollar Tree in our database, holding 3.55 million shares and 3.53 million shares respectively.

4. Macy’s, Inc. (NYSE:M)

• Investors with Long Positions (as of June 30): 61
• Aggregate Value of Investors’ Holdings (as of June 30): $2.20 Billion
• Percentage of Shares Owned by Investors: 9.70%

Macy’s, Inc. (NYSE:M) lands in fourth, being pushed past several other FMCG stocks during the second quarter due to very bullish hedge fund sentiment. The number of funds with long positions in Macy’s was up by six, while the value of their holdings soared by just under $1.0 billion. Macy’s was recently the recipient of a holiday salvo from Target Corporation (NYSE:TGT), which has vowed to match its price on any item the two stores carry. Several investors in our database opened large new positions in Macy’s, Inc. (NYSE:M)’s during the second quarter, including Jeffrey Smith’s Starboard Value, Ken Griffin’s Citadel Investment, and Doug Silverman and Alexander Klabin’s Senator Investment.

3. Constellation Brands Inc. (NYSE:STZ)

• Investors with Long Positions (as of June 30): 62
• Aggregate Value of Investors’ Holdings (as of June 30): $4.13 Billion
• Percentage of Shares Owned by Investors: 18.30%

Constellation Brands Inc. (NYSE:STZ) is the first, but not the last alcohol producer to make our list. Investor sentiment in the stock was relatively flat during the second quarter, alongside a similarly flat stock. However, hedge funds owned an impressive 18.30% of the company’s stock, and that has paid off in the third quarter with the stock putting up gains of over 10% despite suffering like most other stocks during the August market correction. A prolific wine producer which also claims dominion over the popular beer brand Corona and the whiskey brand Black Velvet, among others, Constellation Brands Inc. (NYSE:STZ) is a favorite stock of WCG Management. Other investors with large positions include Michael Lowenstein’s Kensico Capital, and Boykin Curry’s Eagle Capital Management.

2. The Coca-Cola Co (NYSE:KO)

• Investors with Long Positions (as of June 30): 62
• Aggregate Value of Investors’ Holdings (as of June 30): $19.54 Billion
• Percentage of Shares Owned by Investors: 11.40%

The Coca-Cola Co (NYSE:KO), the iconic soda brand, could be considered nearly as iconic in investing circles, owing to its status as one of just a handful of ‘Dividend Kings’; companies which have paid out an increased dividend annually for at least 50 years. The company’s dividend yield currently stands at 3.32%. Coca-Cola is also notable for the investment in it by Warren Buffett, who accounts for a big chunk of the share ownership of the company among the funds we track, owning 400.0 million shares valued at over $15.69 billion. The other 61 investors in the stock own just a small fraction of Coca-Cola’s shares. The Coca-Cola Co (NYSE:KO) was recently named one of the ‘Brands of the Year’ at the World Branding Awards, an honor which was based on brand valuation, consumer market research, and an online vote. It was one of nine U.S-based brands to receive the honor. Donald Yacktman’s Yacktman Asset Management held a 30.50 million-share position in Coco-Cola on June 30.

1. Molson Coors Brewing Company (NYSE:TAP)

• Investors with Long Positions (as of June 30): 66
• Aggregate Value of Investors’ Holdings (as of June 30): $2.12 Billion
• Percentage of Shares Owned by Investors: 18.60%

Elite hedge funds loved Molson Coors Brewing Company (NYSE:TAP) more than any other FMCG stock as of June 30. Hedge fund ownership was up by four during the June quarter, while the value of their stakes was up by about $50 million despite a dip of over 5% in the shares during that time. That bullishness has paid off in a big way, as shares are up by nearly 20% in the third quarter, largely due to the potential Anheuser Busch Inbev SA (ADR) (NYSE:BUD), SABMiller plc (ADR) (OTCMKTS:SBMRY) merger, which could allow Molson Coors Brewing Company (NYSE:TAP) to acquire full ownership of MillerCoors, which it currently owns jointly with SABMiller. Activist Keith Meister of Corvex Capital held a 2.46 million-share stake in Molson Coors on June 30, up by 26% during the second quarter, while Eric W. Mandelblatt’s Soroban Capital Partners opened a new position consisting of 1.71 million shares.

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