We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Keurig Dr Pepper Inc. (NASDAQ:KDP) based on that data.
Is Keurig Dr Pepper Inc. (NASDAQ:KDP) the right pick for your portfolio? Hedge funds are betting on the stock. The number of long hedge fund positions advanced by 4 lately. Our calculations also showed that KDP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
George Soros of Soros Fund Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the key hedge fund action surrounding Keurig Dr Pepper Inc. (NASDAQ:KDP).
Hedge fund activity in Keurig Dr Pepper Inc. (NASDAQ:KDP)
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KDP over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Keurig Dr Pepper Inc. (NASDAQ:KDP) was held by Cedar Rock Capital, which reported holding $220.2 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $82.3 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and Candlestick Capital Management. In terms of the portfolio weights assigned to each position Cedar Rock Capital allocated the biggest weight to Keurig Dr Pepper Inc. (NASDAQ:KDP), around 5.89% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, dishing out 5.39 percent of its 13F equity portfolio to KDP.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in Keurig Dr Pepper Inc. (NASDAQ:KDP). Arrowstreet Capital had $80.6 million invested in the company at the end of the quarter. Simon Sadler’s Segantii Capital also initiated a $17.2 million position during the quarter. The other funds with brand new KDP positions are Steve Cohen’s Point72 Asset Management, Brett Barakett’s Tremblant Capital, and Matthew L Pinz’s Pinz Capital.
Let’s check out hedge fund activity in other stocks similar to Keurig Dr Pepper Inc. (NASDAQ:KDP). We will take a look at Atlassian Corporation Plc (NASDAQ:TEAM), Thomson Reuters Corporation (NYSE:TRI), UBS Group AG (NYSE:UBS), and ConocoPhillips (NYSE:COP). All of these stocks’ market caps are similar to KDP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEAM | 59 | 2586287 | -3 |
| TRI | 22 | 330343 | 1 |
| UBS | 15 | 211262 | 1 |
| COP | 54 | 961915 | -8 |
| Average | 37.5 | 1022452 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $1022 million. That figure was $565 million in KDP’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand UBS Group AG (NYSE:UBS) is the least popular one with only 15 bullish hedge fund positions. Keurig Dr Pepper Inc. (NASDAQ:KDP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately KDP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); KDP investors were disappointed as the stock returned 15.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
