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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 at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Keurig Dr Pepper Inc. (NYSE:KDP) and determine whether the smart money was really smart about this stock.
Keurig Dr Pepper Inc. (NYSE:KDP) investors should be aware of a decrease in enthusiasm from smart money lately. Keurig Dr Pepper Inc. (NYSE:KDP) was in 29 hedge funds' portfolios at the end of June. The all time high for this statistics is 30. There were 30 hedge funds in our database with KDP positions at the end of the first quarter. Our calculations also showed that KDP isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
In the 21st century investor’s toolkit there are dozens of indicators stock market investors use to assess publicly traded companies. A couple of the most useful indicators are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can beat the broader indices by a superb margin (see the details here).
Ken Griffin of Citadel Investment Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we're going to analyze the key hedge fund action regarding Keurig Dr Pepper Inc. (NYSE:KDP).
How have hedgies been trading Keurig Dr Pepper Inc. (NYSE:KDP)?
Heading into the third quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the first quarter of 2020. 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.
Of the funds tracked by Insider Monkey, Cedar Rock Capital, managed by Andy Brown, holds the number one position in Keurig Dr Pepper Inc. (NYSE:KDP). Cedar Rock Capital has a $254.5 million position in the stock, comprising 6.2% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $77.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Israel Englander's Millennium Management, Renaissance Technologies and Brett Barakett's Tremblant Capital. In terms of the portfolio weights assigned to each position Kehrs Ridge Capital allocated the biggest weight to Keurig Dr Pepper Inc. (NYSE:KDP), around 6.72% of its 13F portfolio. Cedar Rock Capital is also relatively very bullish on the stock, designating 6.19 percent of its 13F equity portfolio to KDP.
Due to the fact that Keurig Dr Pepper Inc. (NYSE:KDP) has witnessed declining sentiment from hedge fund managers, we can see that there is a sect of hedgies that elected to cut their full holdings by the end of the second quarter. It's worth mentioning that D. E. Shaw's D E Shaw sold off the biggest stake of all the hedgies followed by Insider Monkey, worth about $46.7 million in stock, and Simon Sadler's Segantii Capital was right behind this move, as the fund dropped about $17.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Keurig Dr Pepper Inc. (NYSE:KDP) but similarly valued. These stocks are Enterprise Products Partners L.P. (NYSE:EPD), Prudential Public Limited Company (NYSE:PUK), American Electric Power Company, Inc. (NYSE:AEP), DuPont de Nemours Inc (NYSE:DD), The Kraft Heinz Company (NASDAQ:KHC), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), and DexCom, Inc. (NASDAQ:DXCM). This group of stocks' market values resemble KDP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EPD,30,222209,4 PUK,5,9403,-1 AEP,34,753751,-4 DD,64,3509743,10 KHC,35,10727266,-4 SMFG,10,101369,0 DXCM,55,1710751,-3 Average,33.3,2433499,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $2433 million. That figure was $726 million in KDP's case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 5 bullish hedge fund positions. Keurig Dr Pepper Inc. (NYSE:KDP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KDP is 53.3. 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 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately KDP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); KDP investors were disappointed as the stock returned 2% since Q2 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.