Hedge Funds Are Crazy About Monster Beverage Corp (MNST)

Monster Beverage Corp (NASDAQ:MNST) was in 38 hedge funds’ portfolio at the end of March. MNST has experienced an increase in hedge fund sentiment in recent months. There were 28 hedge funds in our database with MNST holdings at the end of the previous quarter.

According to most investors, hedge funds are perceived as slow, old investment tools of years past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the upper echelon of this group, around 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total capital, and by tracking their top picks, we have determined a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, positive insider trading activity is another way to parse down the world of equities. Obviously, there are a variety of incentives for an insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this tactic if “monkeys” know what to do (learn more here).

Keeping this in mind, let’s take a glance at the key action encompassing Monster Beverage Corp (NASDAQ:MNST).

How have hedgies been trading Monster Beverage Corp (NASDAQ:MNST)?

At the end of the first quarter, a total of 38 of the hedge funds we track held long positions in this stock, a change of 36% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Eminence Capital, managed by Ricky Sandler, holds the largest position in Monster Beverage Corp (NASDAQ:MNST). Eminence Capital has a $92.8 million position in the stock, comprising 2.4% of its 13F portfolio. The second largest stake is held by Broadwood Capital, managed by Neal C. Bradsher, which held a $78.3 million position; the fund has 22.8% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Jim Simons’s Renaissance Technologies, Arthur B Cohen and Joseph Healey’s Healthcor Management LP and Michael Lowenstein’s Kensico Capital.

Now, key hedge funds have been driving this bullishness. Scout Capital Management, managed by James Crichton and Adam Weiss, created the most outsized position in Monster Beverage Corp (NASDAQ:MNST). Scout Capital Management had 44.9 million invested in the company at the end of the quarter. Larry Foley and Paul Farrell’s Bronson Point Partners also initiated a $23.8 million position during the quarter. The other funds with new positions in the stock are Sanford J. Colen’s Apex Capital, Wojciech Uzdelewicz’s Espalier Global Management, and Malcolm Fairbairn’s Ascend Capital.

How have insiders been trading Monster Beverage Corp (NASDAQ:MNST)?

Bullish insider trading is best served when the primary stock in question has seen transactions within the past six months. Over the last half-year time frame, Monster Beverage Corp (NASDAQ:MNST) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Monster Beverage Corp (NASDAQ:MNST). These stocks are Coca-Cola Enterprises Inc (NYSE:CCE) and Dr Pepper Snapple Group Inc. (NYSE:DPS). This group of stocks are in the beverages – soft drinks industry and their market caps are similar to MNST’s market cap.