The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Constellation Brands, Inc. (NYSE:STZ) based on those filings.
Constellation Brands, Inc. (NYSE:STZ) was in 50 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 71. STZ has seen a decrease in support from the world’s most elite money managers of late. There were 58 hedge funds in our database with STZ positions at the end of the first quarter. Our calculations also showed that STZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Jeffrey Gates of Gates Capital
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Do Hedge Funds Think STZ Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STZ over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Constellation Brands, Inc. (NYSE:STZ), with a stake worth $183.8 million reported as of the end of June. Trailing Arrowstreet Capital was Citadel Investment Group, which amassed a stake valued at $170.2 million. Gates Capital Management, D E Shaw, and Millennium Management 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 Franklin Street Capital allocated the biggest weight to Constellation Brands, Inc. (NYSE:STZ), around 5.56% of its 13F portfolio. Freshford Capital Management is also relatively very bullish on the stock, designating 5.47 percent of its 13F equity portfolio to STZ.
Because Constellation Brands, Inc. (NYSE:STZ) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there was a specific group of money managers that elected to cut their full holdings in the second quarter. At the top of the heap, Alexander Mitchell’s Scopus Asset Management cut the largest investment of all the hedgies tracked by Insider Monkey, comprising close to $85.5 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dropped about $57.4 million worth. These transactions are interesting, as total hedge fund interest dropped by 8 funds in the second quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Constellation Brands, Inc. (NYSE:STZ) but similarly valued. These stocks are T. Rowe Price Group, Inc. (NASDAQ:TROW), IHS Markit Ltd. (NYSE:INFO), Agilent Technologies Inc. (NYSE:A), The Bank of New York Mellon Corporation (NYSE:BK), Schlumberger Limited. (NYSE:SLB), TE Connectivity Ltd. (NYSE:TEL), and BCE Inc. (NYSE:BCE). This group of stocks’ market values resemble STZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TROW | 24 | 407032 | -2 |
| INFO | 61 | 5947551 | 7 |
| A | 39 | 3891487 | -3 |
| BK | 52 | 4907372 | 3 |
| SLB | 41 | 1067022 | -9 |
| TEL | 39 | 2134995 | 0 |
| BCE | 14 | 113288 | 4 |
| Average | 38.6 | 2638392 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $2638 million. That figure was $1608 million in STZ’s case. IHS Markit Ltd. (NYSE:INFO) is the most popular stock in this table. On the other hand BCE Inc. (NYSE:BCE) is the least popular one with only 14 bullish hedge fund positions. Constellation Brands, Inc. (NYSE:STZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STZ is 56.4. 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 positive signal but 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 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately STZ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on STZ were disappointed as the stock returned -8.4% since the end of June (through 10/1) 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 many of these stocks already outperformed the market since 2019.
Follow Constellation Brands Inc. (NYSE:STZ)
Follow Constellation Brands Inc. (NYSE:STZ)
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Disclosure: None. This article was originally published at Insider Monkey.
