Where Do Hedge Funds Stand On PepsiCo, Inc. (PEP)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded PepsiCo, Inc. (NASDAQ:PEP) based on those filings.

PepsiCo, Inc. (NASDAQ:PEP) has seen an increase in hedge fund interest of late. PepsiCo, Inc. (NASDAQ:PEP) was in 61 hedge funds’ portfolios at the end of March. The all time high for this statistic is 65. There were 56 hedge funds in our database with PEP positions at the end of the fourth quarter. Our calculations also showed that PEP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most stock holders, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open today, Our researchers look at the masters of this group, around 850 funds. These investment experts handle bulk of the smart money’s total capital, and by tailing their finest stock picks, Insider Monkey has figured out several investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Donald Sussman of Paloma Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to go over the new hedge fund action encompassing PepsiCo, Inc. (NASDAQ:PEP).

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

At Q1’s end, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PEP over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Among these funds, Fundsmith LLP held the most valuable stake in PepsiCo, Inc. (NASDAQ:PEP), which was worth $1419.2 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $511.8 million worth of shares. Diamond Hill Capital, Yacktman Asset Management, and AQR Capital Management 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 Kehrs Ridge Capital allocated the biggest weight to PepsiCo, Inc. (NASDAQ:PEP), around 7.29% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, designating 4.9 percent of its 13F equity portfolio to PEP.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in PepsiCo, Inc. (NASDAQ:PEP). Marshall Wace LLP had $34.7 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $23.8 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Donald Sussman’s Paloma Partners, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to PepsiCo, Inc. (NASDAQ:PEP). These stocks are salesforce.com, inc. (NYSE:CRM), Merck & Co., Inc. (NYSE:MRK), Novartis AG (NYSE:NVS), AbbVie Inc (NYSE:ABBV), Broadcom Inc (NASDAQ:AVGO), Accenture Plc (NYSE:ACN), and Thermo Fisher Scientific Inc. (NYSE:TMO). This group of stocks’ market valuations match PEP’s market valuation.

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As you can see these stocks had an average of 63 hedge funds with bullish positions and the average amount invested in these stocks was $4982 million. That figure was $4882 million in PEP’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 19 bullish hedge fund positions. PepsiCo, Inc. (NASDAQ:PEP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PEP is 67.3. 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately PEP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PEP investors were disappointed as the stock returned 5.2% since the end of March (through 6/11) 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.

Disclosure: None. This article was originally published at Insider Monkey.