Hedge Funds Like Pepsi More than Coke and Other Soda Rivals

#3 Coca-Cola European Partners plc Ordinary Shares (NYSE:CCE)

– Number of Hedge Fund Holders (as of June 30): 40
– Total Value of Hedge Fund Holdings (as of June 30): $1.55 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 19.00%

Coca-Cola European Partners plc Ordinary Shares (NYSE:CCE)’s business is pretty stable. Because it is the sole licensed bottler for products of The Coca-Cola Company in many Western European countries, and demand for The Coca-Cola Company’s products doesn’t change very much, Coca-Cola European Partners’ income stream is resilient, which makes the company’s annual dividend of $1.20 per share (which translates into a 2.97% dividend yield) attractive to many investors, which include 40 funds from our database as of the end of June, up by 10 from the previous quarter. As a bonus, shares also trade for only 16.29 times forward earnings.

#2 The Coca-Cola Co (NYSE:KO)

– Number of Hedge Fund Holders (as of June 30): 55
– Total Value of Hedge Fund Holdings (as of June 30): $21.19 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 10.80%

The Coca-Cola Co (NYSE:KO) is a dividend aristocrat, having increased its dividend payout every year for 53 straight years. Coca-Cola has been able to raise its dividend so consistently due to its strong brand, the relatively in-elasticity of its products, and the company’s economies of scale. In recent years, Coca-Cola has taken steps to diversify itself and move beyond soft drinks as the source of its income. The company has tried to increase its market share in other faster growing beverage segments such as bottled water, energy drinks, juice, etc. in recent years. As Coca-Cola becomes even more diversified and as management works to cut costs further, the company’s dividend of $1.40 a year (3.31% yield at current prices) becomes even more secure. A total of 55 funds owned shares of The Coca-Cola Co (NYSE:KO) at the end of the second quarter, down by seven funds from the previous quarter.

#1 PepsiCo, Inc. (NYSE:PEP)

– Number of Hedge Fund Holders (as of June 30): 58
– Total Value of Hedge Fund Holdings (as of June 30): $5.36 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 3.50%

With 58 funds from our database holding PepsiCo, Inc. (NYSE:PEP) in their portfolios at the end of June, PepsiCo is more popular than The Coca-Cola. Given PepsiCo’s diversification and management’s strong execution, perhaps it isn’t that surprising. On the account of its eight snack brands that generate over $1 billion in annual sales, PepsiCo isn’t as dependent on the soft drink market (which may or may not be in secular decline) as Coca-Cola. With a great quarterly earnings report, PepsiCo’s management has also recently executed better than Coca-Cola. Analysts have an average price target of $115.93 per share on the stock.

Disclosure: none