U.S. Markets closed

Is Anheuser-Busch InBev SA/NV (BUD) Going To Burn These Hedge Funds ?

Asma UL Husna

Does Anheuser-Busch InBev SA/NV (NYSE:BUD) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Anheuser-Busch InBev SA/NV (NYSE:BUD) has experienced an increase in hedge fund interest of late. Our calculations also showed that BUD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the eyes of most investors, hedge funds are viewed as worthless, old investment tools of the past. While there are over 8000 funds in operation at present, We hone in on the aristocrats of this group, around 750 funds. These investment experts oversee bulk of the hedge fund industry's total asset base, and by paying attention to their first-class investments, Insider Monkey has figured out many investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_670377" align="aligncenter" width="473"] Aaron Cowen of Suvretta Capital Management[/caption]

Aaron Cowen Suvretta Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to view the latest hedge fund action encompassing Anheuser-Busch InBev SA/NV (NYSE:BUD).

What have hedge funds been doing with Anheuser-Busch InBev SA/NV (NYSE:BUD)?

At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the second quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in BUD a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Anheuser-Busch InBev SA/NV (NYSE:BUD) was held by Gardner Russo & Gardner, which reported holding $737.5 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $670 million position. Other investors bullish on the company included Renaissance Technologies, Alkeon Capital Management, and Manikay Partners. In terms of the portfolio weights assigned to each position Gardner Russo & Gardner allocated the biggest weight to Anheuser-Busch InBev SA/NV (NYSE:BUD), around 5.74% of its 13F portfolio. Manikay Partners is also relatively very bullish on the stock, dishing out 5.36 percent of its 13F equity portfolio to BUD.

As industrywide interest jumped, key hedge funds were leading the bulls' herd. Suvretta Capital Management, managed by Aaron Cowen, created the biggest position in Anheuser-Busch InBev SA/NV (NYSE:BUD). Suvretta Capital Management had $35.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $10 million position during the quarter. The other funds with brand new BUD positions are Guy Shahar's DSAM Partners, Philippe Laffont's Coatue Management, and John Brandmeyer's Cognios Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Anheuser-Busch InBev SA/NV (NYSE:BUD) but similarly valued. We will take a look at Oracle Corporation (NYSE:ORCL), China Mobile Limited (NYSE:CHL), McDonald's Corporation (NYSE:MCD), and The Unilever Group (NYSE:UL). This group of stocks' market caps are similar to BUD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ORCL,50,4360689,-11 CHL,12,386022,-1 MCD,49,2075982,-3 UL,14,337374,4 Average,31.25,1790017,-2.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $1790 million. That figure was $1800 million in BUD's case. Oracle Corporation (NYSE:ORCL) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 12 bullish hedge fund positions. Anheuser-Busch InBev SA/NV (NYSE:BUD) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BUD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BUD investors were disappointed as the stock returned -15.7% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

Related Content