Things are getting worse and worse in Venezuela. The Coca-Cola Company (NYSE:KO) became the latest company to suspend production in the socialist republic on the account of a sugar shortage that has made it difficult to produce the company’s famous carbonated beverages. Venezuela’s economy has entered into a deep recession and suffers from high inflation due to low crude prices. Because production costs have increased, sugar cane production has fallen, making it difficult to produce sugar based products without the necessary feedstock. In good news, Coca-Cola has said the suspension is temporary, and the company will continue to produce sugarless drinks such as Diet Coke. The Coca-Cola Co (NYSE:KO) shares are not affected by the news, mainly because Venezuela is not a big market for Coca-Cola in the grand scheme of things. In this way, The Coca-Cola Company remains a solid bet, especially for value investors, which is supported by the fact that the stock has seen an increase in popularity among hedge funds in the recent months.
The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on March 31. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded based on those filings.
The Coca-Cola Company (NYSE:KO) was in 62 hedge funds’ portfolios at the end of March, compared to 51 hedge funds in our database with KO holdings at the end of the previous quarter. 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 Anheuser-Busch InBev NV (ADR) (NYSE:BUD), Alibaba Group Holding Ltd (NYSE:BABA), and Pfizer Inc. (NYSE:PFE) to gather more data points.
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In the financial world, there are several gauges market participants can use to analyze publicly traded companies. Two of the most innovative gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outperform the market by a healthy amount (see the details here).
Of the funds tracked by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the biggest position in The Coca-Cola Company (NYSE:KO). Berkshire Hathaway has a $18.556 billion position in the stock, comprising 14.4% of its 13F portfolio. Coming in second is Yacktman Asset Management, led by Donald Yacktman, holding a $848.6 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Ken Fisher’s Fisher Asset Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.
On the next page, we will take a look at the new action surrounding The Coca-Cola Company.
Now, key hedge funds were leading the bulls’ herd. Soroban Capital Partners, managed by Eric W. Mandelblatt, assembled the biggest call position in The Coca-Cola Company (NYSE:KO). Soroban Capital Partners had $556.7 million invested in the company at the end of the first quarter. Bruce Kovner’s Caxton Associates LP also made a $80.4 million investment in the stock during the quarter. The following funds were also among the new KO investors: Stanley Druckenmiller’s Duquesne Capital, Anand Parekh’s Alyeska Investment Group, and Matthew Knauer and Mina Faltas’s Nokota Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Coca-Cola Company (NYSE:KO) but similarly valued. We will take a look at Anheuser-Busch InBev NV (ADR) (NYSE:BUD), Alibaba Group Holding Ltd (NYSE:BABA), Pfizer Inc. (NYSE:PFE), and Chevron Corporation (NYSE:CVX). This group of stocks’ market valuations are closest to KO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BUD | 32 | 5146091 | -4 |
| BABA | 67 | 5139777 | -10 |
| PFE | 119 | 8371790 | 10 |
| CVX | 46 | 1713423 | 2 |
As you can see these stocks had an average of 66 hedge funds with bullish positions and the average amount invested in these stocks was $5.09 billion. That figure was $22.81 billion in KO’s case. Pfizer Inc. (NYSE:PFE) is the most popular stock in this table. On the other hand Anheuser-Busch InBev NV (ADR) (NYSE:BUD) is the least popular one with only 32 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PFE might be a better candidate to consider a long position.
Disclosure: None
