Hayden Capital, a value-oriented investment firm, released its third quarter 2023 investor letter. A copy of the same can be downloaded here. The portfolio rose in the third quarter and returned 11.6% (net) compared to (3.3%) return for the S&P 500 Index and (3.7%) return for the MSCI World Index. Several holding companies began to exhibit indications of reaccelerating growth in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Hayden Capital highlighted stocks like The Coca-Cola Company (NYSE:KO) in the third quarter 2023 investor letter. Headquartered in Atlanta, Georgia, The Coca-Cola Company (NYSE:KO) is a beverage company. On December 11, 2023, The Coca-Cola Company (NYSE:KO) stock closed at $59.04 per share. One-month return of The Coca-Cola Company (NYSE:KO) was 3.40%, and its shares lost 7.74% of their value over the last three months. The Coca-Cola Company (NYSE:KO) has a market capitalization of $255.254 billion.
Hayden Capital made the following comment about The Coca-Cola Company (NYSE:KO) in its third 2023 investor letter:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, The Coca-Cola Company (NYSE:KO) trades at ~30x P/E despite having the same earnings as 10 years ago.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Coca-Cola is facing disruption risk from consumers shifting to new, heathier beverage brands.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.”
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
A row of factory workers assembling bottles of sparkling soft drinks on a conveyor belt.
The Coca-Cola Company (NYSE:KO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held The Coca-Cola Company (NYSE:KO) at the end of third quarter which was 61 in the previous quarter.
We discussed The Coca-Cola Company (NYSE:KO) in another article and shared the list of dividend aristocrats among billionaires. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
