Is Dr Pepper Snapple Group Inc. (NYSE:DPS) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Dr Pepper Snapple Group Inc. (NYSE:DPS) investors should pay attention to a decrease in support from the world’s most elite money managers lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The Clorox Company (NYSE:CLX), DTE Energy Co (NYSE:DTE), and The J.M. Smucker Company (NYSE:SJM) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s take a look at the recent action regarding Dr Pepper Snapple Group Inc. (NYSE:DPS).
Hedge fund activity in Dr Pepper Snapple Group Inc. (NYSE:DPS)
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, down 6% from the second quarter of 2016. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Andy Brown’s Cedar Rock Capital has the largest position in Dr Pepper Snapple Group Inc. (NYSE:DPS), worth close to $996.1 million and accounting for 24.4% of its total 13F portfolio. On Cedar Rock Capital’s heels is Cliff Asness of AQR Capital Management, with a $228.9 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism consist of Mario Gabelli’s GAMCO Investors, D E Shaw and Israel Englander’s Millennium Management.
Due to the fact that Dr Pepper Snapple Group Inc. (NYSE:DPS) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies who were dropping their full holdings heading into Q4. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group sold off the largest stake of the 700 funds tracked by Insider Monkey, valued at an estimated $20 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $2 million worth of options. These transactions are interesting, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Dr Pepper Snapple Group Inc. (NYSE:DPS) but similarly valued. We will take a look at The Clorox Company (NYSE:CLX), DTE Energy Co (NYSE:DTE), The J.M. Smucker Company (NYSE:SJM), and Sasol Limited (ADR) (NYSE:SSL). All of these stocks’ market caps resemble DPS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLX | 25 | 771295 | -1 |
| DTE | 20 | 533875 | 5 |
| SJM | 25 | 411234 | -5 |
| SSL | 9 | 23488 | -2 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $435 million. That figure was an impressive $1.87 billion in DPS’s case. The Clorox Company (NYSE:CLX) is the most popular stock in this table. On the other hand Sasol Limited (ADR) (NYSE:SSL) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Dr Pepper Snapple Group Inc. (NYSE:DPS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none.
