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Hedge Funds Are Selling Molson Coors Brewing Company (TAP)

Nina Todic

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Molson Coors Brewing Company (NYSE:TAP) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Is Molson Coors Brewing Company (NYSE:TAP) the right investment to pursue these days? The best stock pickers are getting less bullish. The number of long hedge fund positions were cut by 2 lately. Our calculations also showed that TAP isn't among the 30 most popular stocks among hedge funds. TAP was in 25 hedge funds' portfolios at the end of June. There were 27 hedge funds in our database with TAP positions at the end of the previous quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]

AQR CAPITAL MANAGEMENT

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's analyze the key hedge fund action surrounding Molson Coors Brewing Company (NYSE:TAP).

How have hedgies been trading Molson Coors Brewing Company (NYSE:TAP)?

At Q2's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TAP over the last 16 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

No of Hedge Funds with TAP Positions

More specifically, Ariel Investments was the largest shareholder of Molson Coors Brewing Company (NYSE:TAP), with a stake worth $99.5 million reported as of the end of March. Trailing Ariel Investments was AQR Capital Management, which amassed a stake valued at $73.4 million. D E Shaw, Nitorum Capital, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Since Molson Coors Brewing Company (NYSE:TAP) has witnessed bearish sentiment from the smart money, it's easy to see that there was a specific group of hedgies that elected to cut their positions entirely by the end of the second quarter. At the top of the heap, Allan Mecham and Ben Raybould's Arlington Value Capital dumped the biggest stake of the "upper crust" of funds tracked by Insider Monkey, worth an estimated $34.4 million in stock. Renaissance Technologies, also dropped its stock, about $19.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds by the end of the second quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Molson Coors Brewing Company (NYSE:TAP) but similarly valued. These stocks are Agnico Eagle Mines Limited (NYSE:AEM), Cboe Global Markets, Inc. (NASDAQ:CBOE), Old Dominion Freight Line, Inc. (NASDAQ:ODFL), and Rollins, Inc. (NYSE:ROL). This group of stocks' market values match TAP's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AEM,26,379563,2 CBOE,24,1270655,2 ODFL,23,199829,-3 ROL,23,253576,3 Average,24,525906,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $526 million. That figure was $452 million in TAP's case. Agnico Eagle Mines Limited (NYSE:AEM) is the most popular stock in this table. On the other hand Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is the least popular one with only 23 bullish hedge fund positions. Molson Coors Brewing Company (NYSE:TAP) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on TAP, though not to the same extent, as the stock returned 3.8% during the third quarter and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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