How Do Hedge Funds Feel About The Coca-Cola Company (KO)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of The Coca-Cola Company (NYSE:KO).

The Coca-Cola Company (NYSE:KO) investors should be aware of an increase in hedge fund interest recently. The Coca-Cola Company (NYSE:KO) was in 62 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 62. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that KO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Yacktman of Yacktman Asset Management

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 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. 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 check out the latest hedge fund action encompassing The Coca-Cola Company (NYSE:KO).

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

At the end of June, a total of 62 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the first quarter of 2020. By comparison, 59 hedge funds held shares or bullish call options in KO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

The largest stake in The Coca-Cola Company (NYSE:KO) was held by Berkshire Hathaway, which reported holding $21644 million worth of stock at the end of June. It was followed by D E Shaw with a $481.5 million position. Other investors bullish on the company included Arrowstreet Capital, Bridgewater Associates, and Yacktman Asset Management. In terms of the portfolio weights assigned to each position RIT Capital Partners allocated the biggest weight to The Coca-Cola Company (NYSE:KO), around 13.32% of its 13F portfolio. Berkshire Hathaway is also relatively very bullish on the stock, earmarking 7.39 percent of its 13F equity portfolio to KO.

Now, key money managers have been driving this bullishness. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, assembled the biggest call position in The Coca-Cola Company (NYSE:KO). Alkeon Capital Management had $54.1 million invested in the company at the end of the quarter. Andrew Weiss’s Weiss Asset Management also initiated a $11.2 million position during the quarter. The following funds were also among the new KO investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Michael Gelband’s ExodusPoint Capital, and Qing Li’s Sciencast Management.

Let’s now review hedge fund activity in other stocks similar to The Coca-Cola Company (NYSE:KO). These stocks are Verizon Communications Inc. (NYSE:VZ), Intel Corporation (NASDAQ:INTC), salesforce.com, inc. (NYSE:CRM), Cisco Systems, Inc. (NASDAQ:CSCO), Eli Lilly and Company (NYSE:LLY), Pfizer Inc. (NYSE:PFE), and Oracle Corporation (NYSE:ORCL). This group of stocks’ market valuations are similar to KO’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 70.7 hedge funds with bullish positions and the average amount invested in these stocks was $5993 million. That figure was $24966 million in KO’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Oracle Corporation (NYSE:ORCL) is the least popular one with only 55 bullish hedge fund positions. The Coca-Cola Company (NYSE:KO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KO is 42.6. 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. 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 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately KO wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KO investors were disappointed as the stock returned -0.2% since the end of June (through 9/27) 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 most of these stocks already outperformed the market in 2021.

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