Diageo plc (ADR) (DEO): Are Hedge Funds Right About This Stock?

Is Diageo plc (ADR) (NYSE:DEO) a healthy stock for your portfolio? Money managers are reducing their bets on the stock. The number of long hedge fund positions decreased by 1 in recent months.

To the average investor, there are tons of gauges shareholders can use to analyze stocks. A duo of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can trounce the market by a healthy amount (see just how much).

Just as integral, bullish insider trading sentiment is another way to parse down the financial markets. There are plenty of reasons for an executive to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this method if shareholders understand where to look (learn more here).

With these “truths” under our belt, let’s take a gander at the recent action encompassing Diageo plc (ADR) (NYSE:DEO).

How are hedge funds trading Diageo plc (ADR) (NYSE:DEO)?

At the end of the first quarter, a total of 17 of the hedge funds we track were long in this stock, a change of -6% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully.

According to our comprehensive database, Gardner Russo & Gardner, managed by Tom Russo, holds the biggest position in Diageo plc (ADR) (NYSE:DEO). Gardner Russo & Gardner has a $228.1 million position in the stock, comprising 2.7% of its 13F portfolio. Coming in second is Tom Gayner of Markel Gayner Asset Management, with a $154.9 million position; 5.8% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Mario Gabelli’s GAMCO Investors, John Osterweis’s Osterweis Capital Management and Tom Russo’s Gardner Russo & Gardner.

Because Diageo plc (ADR) (NYSE:DEO) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies that decided to sell off their entire stakes heading into Q2. It’s worth mentioning that Israel Englander’s Millennium Management cut the largest investment of the “upper crust” of funds we monitor, comprising about $5 million in stock., and Ken Griffin of Citadel Investment Group was right behind this move, as the fund sold off about $2.8 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds heading into Q2.

What do corporate executives and insiders think about Diageo plc (ADR) (NYSE:DEO)?

Insider purchases made by high-level executives is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest half-year time period, Diageo plc (ADR) (NYSE:DEO) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s research, retail investors should always watch hedge fund and insider trading sentiment, and Diageo plc (ADR) (NYSE:DEO) applies perfectly to this mantra.

Click here to learn why you should track hedge funds