Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Monster Beverage Corp (NASDAQ:MNST) and compare its performance to hedge funds’ consensus picks in 2019.
Is Monster Beverage Corp (NASDAQ:MNST) ready to rally soon? Prominent investors are in a pessimistic mood. The number of long hedge fund positions decreased by 4 in recent months. Our calculations also showed that MNST isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
According to most investors, hedge funds are viewed as unimportant, old investment tools of years past. While there are over 8000 funds with their doors open at the moment, Our experts choose to focus on the moguls of this group, approximately 750 funds. These investment experts control the lion’s share of the smart money’s total asset base, and by monitoring their matchless investments, Insider Monkey has discovered a few investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Andreas Halvorsen of Viking Global
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s take a glance at the key hedge fund action encompassing Monster Beverage Corp (NASDAQ:MNST).
What have hedge funds been doing with Monster Beverage Corp (NASDAQ:MNST)?
Heading into the fourth quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MNST over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Viking Global was the largest shareholder of Monster Beverage Corp (NASDAQ:MNST), with a stake worth $611.6 million reported as of the end of September. Trailing Viking Global was Renaissance Technologies, which amassed a stake valued at $552.6 million. Broadwood Capital, AQR Capital Management, and Maverick Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Broadwood Capital allocated the biggest weight to Monster Beverage Corp (NASDAQ:MNST), around 37.71% of its 13F portfolio. Viking Global is also relatively very bullish on the stock, setting aside 3.19 percent of its 13F equity portfolio to MNST.
Seeing as Monster Beverage Corp (NASDAQ:MNST) has faced a decline in interest from the smart money, we can see that there was a specific group of hedgies that decided to sell off their entire stakes last quarter. Intriguingly, Eashwar Krishnan’s Tybourne Capital Management said goodbye to the largest stake of all the hedgies monitored by Insider Monkey, comprising close to $199.4 million in stock, and James Crichton’s Hitchwood Capital Management was right behind this move, as the fund dumped about $22.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Monster Beverage Corp (NASDAQ:MNST) but similarly valued. We will take a look at Tyson Foods, Inc. (NYSE:TSN), Public Service Enterprise Group Incorporated (NYSE:PEG), Consolidated Edison, Inc. (NYSE:ED), and TE Connectivity Ltd. (NYSE:TEL). This group of stocks’ market values match MNST’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSN | 48 | 1716693 | 9 |
| PEG | 18 | 838718 | -5 |
| ED | 22 | 1396380 | -4 |
| TEL | 30 | 1265055 | 3 |
| Average | 29.5 | 1304212 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $1304 million. That figure was $2641 million in MNST’s case. Tyson Foods, Inc. (NYSE:TSN) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 18 bullish hedge fund positions. Monster Beverage Corp (NASDAQ:MNST) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately MNST wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MNST were disappointed as the stock returned 28.7% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
