Barclays PLC (ADR) (NYSE:BCS) has announced its top stock picks for its latest Americas Top Picks List in different sectors. In the Consumer sector, Barclays picks include food and beverage companies like PepsiCo, Inc. (NYSE:PEP) and Mondelez International Inc (NASDAQ:MDLZ) and the food retailer company, Sprouts Farmers Market Inc (NASDAQ:SFM). How do hedge funds feel about these stocks? Let’s crunch the numbers and find out.
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Barclays PLC (ADR) (NYSE:BCS) mentioned that it still holds PepsiCo, Inc. (NYSE:PEP) as its top pick in the U.S. Beverages and Tobacco segment. It believes that PepsiCo, Inc. (NYSE:PEP) will continue to meet or beat expectations for the rest of this year. Barclays acknowledged the fact that currency headwinds might play a role, but it thinks that the company’s underlying growth is holding up well in a slow-paced market space. It thinks that the activist influence on the stock might help the company in delivering strong results as well, and that the attractive cash returns along with target-meeting capabilities should push the stock up further in 2015. Barclays has set a price target of $111 on the stock, which is 19% more from what the stock closed at on Tuesday.
At the end of the first quarter, there were 61 hedge funds with a cumulative investment of $8.02 billion in Pepsi, a hike up from the 54 hedge funds with $7.17 billion of the stock at the end of 2014. The 10% increase in capital investment by hedge funds in the stock came amid a minuscule 0.3% gain for it in the first three months of the year, showing the hike in capital was through more shares being bought. Donald Yacktman‘s Yacktman Asset Management holds the largest position in the stock with 25.5 million shares valued at $2.4 billion; comprising 11.2% of the hedge fund’s total 13F portfolio. Notably, James Dinan‘s York Capital Management opened up the largest ‘Call’ position in the stock by buying call options underlying around 8.7 million shares in the quarter. All of the above stats shows that the smart money was indeed bullish on the stock. But what about insiders? There were no insider purchases of the stock, but there were quite a few insider sales. CEO of PepsiCo, Inc. (NYSE:PEP), Indra Nooyi sold over 58,000 shares in May, while CEO, America Beverages, Albert Carey sold nearly 45,000 shares, also in May.
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Mondelez International Inc (NASDAQ:MDLZ)’s stock has jumped by more than 12% in the last three months. Barclays said that it maintains Mondelez as its top pick in the consumer sector. It mentioned that the expected Coffee JV closure in the third quarter might stir things up for the company. Barclays feels that Mondelez International Inc (NASDAQ:MDLZ)’s top-line and bottom-line guidance for 2015 is conservative, considering the fact that the company’s organic sales have outperformed in the first quarter. Barclays also pointed at the fact that much of Mondelez International Inc (NASDAQ:MDLZ)’s work on supply chain cost cutting is likely to yield benefits in the second half of the year. Barclays is foreseeing a potential upside movement for the stock and has set a price target of $44 on the stock.
Heading into the second quarter, there were 65 hedge funds with a total investment of $6.1 billion in Mondelez. This total investment dropped from $6.75 billion held by 63 hedge funds at the end of 2014. Within our database, Nelson Peltz‘s Trian Partners holds the largest position in the stock with 48.0 million shares valued at $1.7 billion and accounting for 20% of its 13F portfolio. Despite the fact that the actual number of hedge funds holding positions in the stock has gone up by two, many hedge fund managers opted to cut their position in the stock, where as a few others opted to sell their entire stake in the company. Leading the way in that aspect was Doug Silverman and Alexander Klabin‘s Senator Investment Group. Senator Investment Group sold around 4.0 million shares of the company in the first trimester. There have been no insider sales of shares so far this year. In terms of purchases, Peltz, a Director at Mondelez International Inc (NASDAQ:MDLZ), purchased around 1.2 million shares in February, though this shouldn’t be considered a typical insider purchase that one should pay attention to.
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Since February, Sprouts Farmers Market Inc (NASDAQ:SFM) stock has plunged by 30%. However Barclays claims that Sprouts Farmers is well positioned due to its unique store format, assortment, and cheap price tags compared to other competitors. Barclays expects that the food retailer will return to strong comp growth in the second half of 2015.
Hedge funds showed strong positive signs on the stock as the number of hedge funds with positions in the stock went up to 24 by the end of March, from just 15 at the end of 2014. Also, the aggregate capital investment by hedge funds tracked by Insider Monkey skyrocketed by a whopping 93% to $379.9 million at the end of the first trimester. Considering the fact that Sprouts Farmers Market Inc (NASDAQ:SFM)’s stock has gained just 6% in the January to March period, we can say that the hedge funds were very bullish on the stock and buying up shares. Ken Griffin‘s Citadel Investment Group holds the largest position in the stock with 4.3 million shares, followed by Donald Chiboucis’ Columbus Circle Investors with 1.7 million shares, and Israel Englander‘s Millennium Management with 1.09 million shares. The largest fresh position in the stock was opened by Louis Bacon’s Moore Global Investors, as it bought 550,000 shares of Sprouts Farmers Market Inc (NASDAQ:SFM) in the first quarter. There have been no insider purchases of shares in 2015, but CEO of Sprouts Farmers Market Inc (NASDAQ:SFM), James Sanders sold around 413,000 shares in multiple transaction towards the end of the first quarter.
Hedge funds were bullish on PepsiCo & Sprouts Farmers stocks and they seem to be in-line with Barclays top picks for the consumer sector with these two stocks. Considering that Sprouts has decreased by over 25% since the end of the first quarter, investors have the chance to get in at a much cheaper price than what hedge funds were bullishly buying in at, on a stock that is still highly favored by Barclays as well. Hedge funds did not think as highly of Mondelez International however, and we don’t see there being a lot of room left to the upside on this stock right now.
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