We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Keurig Dr Pepper Inc. (NASDAQ:KDP).
Keurig Dr Pepper Inc. (NASDAQ:KDP) investors should be aware of an increase in activity from the world’s largest hedge funds recently. KDP was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 23 hedge funds in our database with KDP positions at the end of the previous quarter. Our calculations also showed that KDP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Philippe Laffont of Coatue Management
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the fresh hedge fund action regarding Keurig Dr Pepper Inc. (NASDAQ:KDP).
Hedge fund activity in Keurig Dr Pepper Inc. (NYSE:KDP)
At Q4’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in KDP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Keurig Dr Pepper Inc. (NYSE:KDP) was held by Cedar Rock Capital, which reported holding $275.1 million worth of stock at the end of September. It was followed by D E Shaw with a $105.1 million position. Other investors bullish on the company included Levin Easterly Partners, Soros Fund Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Cedar Rock Capital allocated the biggest weight to Keurig Dr Pepper Inc. (NYSE:KDP), around 6.23% of its 13F portfolio. Candlestick Capital Management is also relatively very bullish on the stock, setting aside 1.21 percent of its 13F equity portfolio to KDP.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Candlestick Capital Management, managed by Jack Woodruff, assembled the biggest position in Keurig Dr Pepper Inc. (NYSE:KDP). Candlestick Capital Management had $12.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $5 million position during the quarter. The other funds with brand new KDP positions are Joel Greenblatt’s Gotham Asset Management, Philippe Laffont’s Coatue Management, and Jinghua Yan’s TwinBeech Capital.
Let’s also examine hedge fund activity in other stocks similar to Keurig Dr Pepper Inc. (NYSE:KDP). We will take a look at Dow Inc. (NYSE:DOW), Autodesk, Inc. (NASDAQ:ADSK), V.F. Corporation (NYSE:VFC), and Dollar General Corp. (NYSE:DG). This group of stocks’ market valuations resemble KDP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOW | 34 | 165271 | -3 |
| ADSK | 64 | 3357850 | 16 |
| VFC | 29 | 770788 | -7 |
| DG | 50 | 2075641 | 1 |
| Average | 44.25 | 1592388 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.25 hedge funds with bullish positions and the average amount invested in these stocks was $1592 million. That figure was $594 million in KDP’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand V.F. Corporation (NYSE:VFC) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Keurig Dr Pepper Inc. (NYSE:KDP) is even less popular than VFC. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. A small number of hedge funds were also right about betting on KDP, though not to the same extent, as the stock returned -9.5% during the same time period and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
