Is The Coca-Cola Company (KO) Going to Burn These Hedge Funds?

Is The Coca-Cola Company (NYSE:KO) a sound investment right now? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund bets shrunk by 2 in recent months.

In the financial world, there are many gauges shareholders can use to monitor publicly traded companies. A duo of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the S&P 500 by a superb amount (see just how much).

Just as important, optimistic insider trading sentiment is another way to parse down the stock market universe. Obviously, there are many motivations for an executive to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this method if piggybackers understand where to look (learn more here).

With all of this in mind, it’s important to take a look at the recent action encompassing The Coca-Cola Company (NYSE:KO).

Hedge fund activity in The Coca-Cola Company (NYSE:KO)

Heading into Q2, a total of 59 of the hedge funds we track were bullish in this stock, a change of -3% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Berkshire Hathaway, managed by Warren Buffett, holds the largest position in The Coca-Cola Company (NYSE:KO). Berkshire Hathaway has a $16.176 billion position in the stock, comprising 19% of its 13F portfolio. The second largest stake is held by Bill & Melinda Gates Foundation Trust, managed by Michael Larson, which held a $1.375 billion position; the fund has 7.6% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Donald Yacktman’s Yacktman Asset Management, Boykin Curry’s Eagle Capital Management and Ken Fisher’s Fisher Asset Management.

Due to the fact that The Coca-Cola Company (NYSE:KO) has experienced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of money managers who sold off their entire stakes at the end of the first quarter. Interestingly, Paul Ruddock and Steve Heinz’s Lansdowne Partners said goodbye to the biggest stake of the “upper crust” of funds we watch, worth an estimated $199.1 million in stock. Donald Chiboucis’s fund, Columbus Circle Investors, also dumped its stock, about $192.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds at the end of Q1.

What have insiders been doing with The Coca-Cola Company (NYSE:KO)?

Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time frame, The Coca-Cola Company (NYSE:KO) has experienced 1 unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to The Coca-Cola Company (NYSE:KO). These stocks are Dr Pepper Snapple Group Inc. (NYSE:DPS), Coca-Cola Enterprises Inc (NYSE:CCE), Coca-Cola FEMSA, S.A.B. de C.V. (ADR) (NYSE:KOF), and PepsiCo, Inc. (NYSE:PEP). All of these stocks are in the beverages – soft drinks industry and their market caps are closest to KO’s market cap.