Is Monster Beverage Corp (MNST) a Good Stock To Buy?

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Hedge fund interest in Monster Beverage Corp (NASDAQ:MNST) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Marsh & McLennan Companies, Inc. (NYSE:MMC), Williams Companies, Inc. (NYSE:WMB), and WPP PLC (ADR) (NASDAQ:WPPGY) to gather more data points.

Now, let’s go over the latest action encompassing Monster Beverage Corp (NASDAQ:MNST).

How have hedgies been trading Monster Beverage Corp (NASDAQ:MNST)?

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Neal C. Bradsher’s Broadwood Capital has the largest position in Monster Beverage Corp (NASDAQ:MNST), worth close to $216.1 million, accounting for 42.5% of its total 13F portfolio. On Broadwood Capital’s heels is Caxton Associates LP, led by Bruce Kovner, holding a $157.6 million position; the fund has 9.6% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Cliff Asness’ AQR Capital Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

Interestingly, Joel Greenblatt’s Gotham Asset Management sold off the largest position of all the hedgies monitored by Insider Monkey, worth about $35.5 million in stock. Malcolm Fairbairn’s fund, Ascend Capital, also dropped its stock, about $6.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Monster Beverage Corp (NASDAQ:MNST). These stocks are Marsh & McLennan Companies, Inc. (NYSE:MMC), Williams Companies, Inc. (NYSE:WMB), WPP PLC (ADR) (NASDAQ:WPPGY), and Air Products & Chemicals, Inc. (NYSE:APD). All of these stocks’ market caps match MNST’s market cap.

As you can see these stocks had an average of 46.25 hedge funds with bullish positions and the average amount invested in these stocks was $3,605 million. That figure was $773 million in MNST’s case. Air Products & Chemicals, Inc. (NYSE:APD) is the most popular stock in this table. On the other hand WPP PLC (ADR) (NASDAQ:WPPGY) is the least popular one with only 9 bullish hedge fund positions. Monster Beverage Corp (NASDAQ:MNST) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard APD might be a better candidate to consider a long position.