In this article we will analyze whether Molson Coors Beverage Company (NYSE:TAP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Molson Coors Beverage Company (NYSE:TAP) a cheap investment right now? Prominent investors were turning less bullish. The number of bullish hedge fund bets were cut by 5 recently. Molson Coors Beverage Company (NYSE:TAP) was in 34 hedge funds’ portfolios at the end of March. The all time high for this statistic is 70. Our calculations also showed that TAP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 39 hedge funds in our database with TAP positions at the end of the fourth quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
John Rogers of Ariel Investments
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the latest hedge fund action surrounding Molson Coors Beverage Company (NYSE:TAP).
Do Hedge Funds Think TAP Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. By comparison, 34 hedge funds held shares or bullish call options in TAP a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in Molson Coors Beverage Company (NYSE:TAP), which was worth $52.8 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $34.9 million worth of shares. Diamond Hill Capital, Ariel Investments, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Empirical Capital Partners allocated the biggest weight to Molson Coors Beverage Company (NYSE:TAP), around 6.6% of its 13F portfolio. Venator Capital Management is also relatively very bullish on the stock, earmarking 3.44 percent of its 13F equity portfolio to TAP.
Judging by the fact that Molson Coors Beverage Company (NYSE:TAP) has experienced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few money managers who sold off their positions entirely heading into Q2. It’s worth mentioning that Michael Burry’s Scion Asset Management cut the biggest position of all the hedgies tracked by Insider Monkey, worth close to $6.8 million in stock, and Orkun Kilic’s Berry Street Capital was right behind this move, as the fund sold off about $4.5 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds heading into Q2.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Molson Coors Beverage Company (NYSE:TAP) but similarly valued. These stocks are MKS Instruments, Inc. (NASDAQ:MKSI), Dun & Bradstreet Corporation (NYSE:DNB), Dr. Reddy’s Laboratories Limited (NYSE:RDY), Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), Hubbell Incorporated (NYSE:HUBB), The Western Union Company (NYSE:WU), and Teck Resources Ltd (NYSE:TECK). All of these stocks’ market caps are closest to TAP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MKSI | 22 | 512507 | -5 |
| DNB | 29 | 835475 | -3 |
| RDY | 12 | 180324 | 0 |
| NCLH | 34 | 576202 | -6 |
| HUBB | 15 | 421137 | -7 |
| WU | 28 | 410366 | -1 |
| TECK | 30 | 1071508 | -1 |
| Average | 24.3 | 572503 | -3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $573 million. That figure was $341 million in TAP’s case. Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) is the most popular stock in this table. On the other hand Dr. Reddy’s Laboratories Limited (NYSE:RDY) is the least popular one with only 12 bullish hedge fund positions. Molson Coors Beverage Company (NYSE:TAP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TAP is 64.6. 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. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on TAP, though not to the same extent, as the stock returned 7.7% since Q1 (through June 25th) and outperformed the market as well.
Follow Molson Coors Beverage Co (NYSE:TAP)
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Disclosure: None. This article was originally published at Insider Monkey.
