At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Mondelez International Inc (NASDAQ:MDLZ).
Mondelez International Inc (NASDAQ:MDLZ) was in 54 hedge funds’ portfolios at the end of March. MDLZ investors should be aware of an increase in support from the world’s most elite money managers in recent months. There were 50 hedge funds in our database with MDLZ holdings at the end of the previous quarter. Our calculations also showed that MDLZ 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.
In the eyes of most stock holders, hedge funds are seen as worthless, old financial vehicles of years past. While there are over 8000 funds in operation at present, Our experts choose to focus on the leaders of this group, approximately 850 funds. It is estimated that this group of investors control the majority of the smart money’s total asset base, and by tailing their matchless stock picks, Insider Monkey has found a number of investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Nelson Peltz of Trian Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the recent hedge fund action encompassing Mondelez International Inc (NASDAQ:MDLZ).
How have hedgies been trading Mondelez International Inc (NASDAQ:MDLZ)?
Heading into the second quarter of 2020, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 47 hedge funds with a bullish position in MDLZ a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Mondelez International Inc (NASDAQ:MDLZ) was held by Trian Partners, which reported holding $793.5 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $233.1 million position. Other investors bullish on the company included Two Sigma Advisors, Hillhouse Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to Mondelez International Inc (NASDAQ:MDLZ), around 11.44% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, designating 7.86 percent of its 13F equity portfolio to MDLZ.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Diamond Hill Capital, managed by Ric Dillon, assembled the most valuable position in Mondelez International Inc (NASDAQ:MDLZ). Diamond Hill Capital had $233.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $42.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Mark Coe’s Intrinsic Edge Capital, and Steven Boyd’s Armistice Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mondelez International Inc (NASDAQ:MDLZ) but similarly valued. We will take a look at HDFC Bank Limited (NYSE:HDB), General Electric Company (NYSE:GE), American Express Company (NYSE:AXP), and BlackRock, Inc. (NYSE:BLK). This group of stocks’ market valuations are similar to MDLZ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HDB | 38 | 1852582 | -1 |
| GE | 58 | 3531845 | -2 |
| AXP | 57 | 15414059 | -1 |
| BLK | 38 | 678087 | -5 |
| Average | 47.75 | 5369143 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.75 hedge funds with bullish positions and the average amount invested in these stocks was $5369 million. That figure was $2218 million in MDLZ’s case. General Electric Company (NYSE:GE) is the most popular stock in this table. On the other hand HDFC Bank Limited (NYSE:HDB) is the least popular one with only 38 bullish hedge fund positions. Mondelez International Inc (NASDAQ:MDLZ) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately MDLZ wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MDLZ were disappointed as the stock returned -0.8% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
