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Hedge Funds Nibbling On Molson Coors Beverage Company (TAP)

Abigail Fisher

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Molson Coors Beverage Company (NYSE:TAP).

Is Molson Coors Beverage Company (NYSE:TAP) a buy, sell, or hold? Prominent investors are turning bullish. The number of long hedge fund positions moved up by 3 lately. Our calculations also showed that TAP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_758429" align="aligncenter" width="399"] Ric Dillon of Diamond Hill Capital[/caption]

Ric Dillon Diamond Hill Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the key hedge fund action encompassing Molson Coors Beverage Company (NYSE:TAP).

What does smart money think about Molson Coors Beverage Company (NYSE:TAP)?

At the end of the first quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in TAP a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Cliff Asness's AQR Capital Management has the largest position in Molson Coors Beverage Company (NYSE:TAP), worth close to $60.8 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Ariel Investments, led by John W. Rogers, holding a $58 million position; the fund has 1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Ric Dillon's Diamond Hill Capital, Seth Rosen's Nitorum Capital and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Callodine Capital Management allocated the biggest weight to Molson Coors Beverage Company (NYSE:TAP), around 3.97% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, earmarking 2.23 percent of its 13F equity portfolio to TAP.

As industrywide interest jumped, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most valuable position in Molson Coors Beverage Company (NYSE:TAP). Arrowstreet Capital had $15.4 million invested in the company at the end of the quarter. David Costen Haley's HBK Investments also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Qing Li's Sciencast Management, Dmitry Balyasny's Balyasny Asset Management, and Mike Vranos's Ellington.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Molson Coors Beverage Company (NYSE:TAP) but similarly valued. These stocks are Concho Resources Inc. (NYSE:CXO), Cna Financial Corporation (NYSE:CNA), Kirkland Lake Gold Ltd. (NYSE:KL), and Huntington Bancshares Incorporated (NASDAQ:HBAN). This group of stocks' market caps resemble TAP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CXO,31,492191,-8 CNA,12,51546,-3 KL,28,552273,4 HBAN,29,85788,4 Average,25,295450,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $295 million. That figure was $259 million in TAP's case. Concho Resources Inc. (NYSE:CXO) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Molson Coors Beverage Company (NYSE:TAP) is more popular among hedge funds. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately TAP wasn't nearly as popular as these 10 stocks and hedge funds that were betting on TAP were disappointed as the stock returned -2.7% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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