Hedge Funds Are Crazy About Starbucks Corporation (SBUX)

Is Starbucks Corporation (NASDAQ:SBUX) a bargain? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets inched up by 3 recently.

If you’d ask most stock holders, hedge funds are viewed as underperforming, old financial tools of years past. While there are more than 8000 funds with their doors open today, we at Insider Monkey look at the aristocrats of this group, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their top investments, we have unsheathed a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, bullish insider trading activity is a second way to parse down the world of equities. There are plenty of incentives for a bullish insider to sell shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the valuable potential of this tactic if shareholders know where to look (learn more here).

Now, we’re going to take a gander at the latest action surrounding Starbucks Corporation (NASDAQ:SBUX).

What does the smart money think about Starbucks Corporation (NASDAQ:SBUX)?

In preparation for this quarter, a total of 53 of the hedge funds we track were bullish in this stock, a change of 6% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, James Crichton and Adam Weiss’s Scout Capital Management had the most valuable position in Starbucks Corporation (NASDAQ:SBUX), worth close to $185.1 million, comprising 2.4% of its total 13F portfolio. On Scout Capital Management’s heels is SAC Capital Advisors, managed by Steven Cohen, which held a $181.7 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Donald Chiboucis’s Columbus Circle Investors, John Lykouretzos’s Hoplite Capital Management and D. E. Shaw’s D E Shaw.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Highline Capital Management, managed by Jacob Doft, created the most valuable call position in Starbucks Corporation (NASDAQ:SBUX). Highline Capital Management had 54.1 million invested in the company at the end of the quarter. David Stemerman’s Conatus Capital Management also made a $49.8 million investment in the stock during the quarter. The other funds with brand new SBUX positions are Mark Kingdon’s Kingdon Capital, Sanford J. Colen’s Apex Capital, and Jeffrey Jon Berney’s TriOaks Capital Management.

What have insiders been doing with Starbucks Corporation (NASDAQ:SBUX)?

Bullish insider trading is best served when the company in question has experienced transactions within the past half-year. Over the last six-month time period, Starbucks Corporation (NASDAQ:SBUX) has experienced 1 unique insiders buying, and 12 insider sales (see the details of insider trades here).

With the results shown by Insider Monkey’s studies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Starbucks Corporation (NASDAQ:SBUX) is an important part of this process.

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