Hedge Funds Are Selling Starbucks Corporation (SBUX)

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Starbucks Corporation (NASDAQ:SBUX).

Is Starbucks Corporation (NASDAQ:SBUX) a buy, sell, or hold? Hedge funds were becoming less hopeful. The number of long hedge fund positions shrunk by 5 in recent months. Starbucks Corporation (NASDAQ:SBUX) was in 58 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 68. Our calculations also showed that SBUX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 63 hedge funds in our database with SBUX positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding Starbucks Corporation (NASDAQ:SBUX).

Peter Rathjens of Arrowstreet Capital

Do Hedge Funds Think SBUX Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SBUX over the last 25 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Fundsmith LLP, managed by Terry Smith, holds the largest position in Starbucks Corporation (NASDAQ:SBUX). Fundsmith LLP has a $1.1853 billion position in the stock, comprising 3.3% of its 13F portfolio. The second most bullish fund manager is Fisher Asset Management, managed by Ken Fisher, which holds a $919.9 million position; 0.6% of its 13F portfolio is allocated to the stock. Other peers that are bullish encompass Andy Brown’s Cedar Rock Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Pacifica Capital Investments allocated the biggest weight to Starbucks Corporation (NASDAQ:SBUX), around 14.43% of its 13F portfolio. Cedar Rock Capital is also relatively very bullish on the stock, dishing out 13.05 percent of its 13F equity portfolio to SBUX.

Due to the fact that Starbucks Corporation (NASDAQ:SBUX) has faced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that decided to sell off their positions entirely last quarter. It’s worth mentioning that Gabriel Plotkin’s Melvin Capital Management dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $111.8 million in stock. Steven Boyd’s fund, Armistice Capital, also cut its stock, about $26.8 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Starbucks Corporation (NASDAQ:SBUX) but similarly valued. These stocks are Raytheon Technologies Corp (NYSE:RTX), The Boeing Company (NYSE:BA), Union Pacific Corporation (NYSE:UNP), BlackRock, Inc. (NYSE:BLK), The Goldman Sachs Group, Inc. (NYSE:GS), TotalEnergies SE (NYSE:TTE), and Advanced Micro Devices, Inc. (NASDAQ:AMD). All of these stocks’ market caps resemble SBUX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 51.4 hedge funds with bullish positions and the average amount invested in these stocks was $3110 million. That figure was $4807 million in SBUX’s case. The Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand TotalEnergies SE (NYSE:TTE) is the least popular one with only 16 bullish hedge fund positions. Starbucks Corporation (NASDAQ:SBUX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBUX is 61.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately SBUX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SBUX were disappointed as the stock returned -0.2% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Suggested Articles:

• 12 Best Large-cap Biotech Stocks To Buy Now
• 10 States with the Cheapest Health Insurance
• 15 Largest Energy Companies In The World

Disclosure: None. This article was originally published at Insider Monkey.