Is Molson Coors Beverage Company (TAP) A Good Stock To Buy?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Molson Coors Beverage Company (NYSE:TAP) to find out whether there were any major changes in hedge funds’ views.

Is Molson Coors Beverage Company (NYSE:TAP) a buy here? Investors who are in the know were taking a bearish view. The number of bullish hedge fund positions retreated by 10 in recent months. Molson Coors Beverage Company (NYSE:TAP) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. 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 Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a look at the fresh hedge fund action regarding Molson Coors Beverage Company (NYSE:TAP).

Donald Sussman of Paloma Partners

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

At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TAP over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Ariel Investments was the largest shareholder of Molson Coors Beverage Company (NYSE:TAP), with a stake worth $35.7 million reported as of the end of September. Trailing Ariel Investments was D E Shaw, which amassed a stake valued at $34.5 million. Citadel Investment Group, Citadel Investment Group, and Two Sigma Advisors 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 8.95% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, designating 2.83 percent of its 13F equity portfolio to TAP.

Judging by the fact that Molson Coors Beverage Company (NYSE:TAP) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies who were dropping their positions entirely last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $98.3 million in stock. Brandon Haley’s fund, Holocene Advisors, also cut its stock, about $29.5 million worth. These moves are important to note, as aggregate hedge fund interest fell by 10 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Molson Coors Beverage Company (NYSE:TAP) but similarly valued. We will take a look at Grifols SA (NASDAQ:GRFS), Zions Bancorporation, National Association (NASDAQ:ZION), Everest Re Group Ltd (NYSE:RE), NRG Energy Inc (NYSE:NRG), Bausch Health Companies Inc. (NYSE:BHC), TD SYNNEX Corporation (NYSE:SNX), and Deckers Outdoor Corp (NYSE:DECK). This group of stocks’ market caps match TAP’s market cap.

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As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $1217 million. That figure was $237 million in TAP’s case. Deckers Outdoor Corp (NYSE:DECK) is the most popular stock in this table. On the other hand Grifols SA (NASDAQ:GRFS) is the least popular one with only 12 bullish hedge fund positions. Molson Coors Beverage Company (NYSE:TAP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TAP is 31. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately TAP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TAP investors were disappointed as the stock returned -4.2% since the end of September (through 11/30) 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.