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Was The Smart Money Right About Anheuser-Busch InBev SA/NV (BUD)?

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·6 min read
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  • BUD
  • SCHW
  • RIO

In this article you are going to find out whether hedge funds think Anheuser-Busch InBev SA/NV (NYSE:BUD) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Hedge fund interest in Anheuser-Busch InBev SA/NV (NYSE:BUD) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that BUD isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as The Boeing Company (NYSE:BA), Amgen, Inc. (NASDAQ:AMGN), and The Charles Schwab Corporation (NYSE:SCHW) to gather more data points.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. With all of this in mind let's take a glance at the fresh hedge fund action surrounding Anheuser-Busch InBev SA/NV (NYSE:BUD).

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

At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BUD over the last 24 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BUD A Good Stock To Buy?
Is BUD A Good Stock To Buy?

The largest stake in Anheuser-Busch InBev SA/NV (NYSE:BUD) was held by Fisher Asset Management, which reported holding $609.6 million worth of stock at the end of June. It was followed by Gardner Russo & Gardner with a $380 million position. Other investors bullish on the company included Scopus Asset Management, Arrowstreet Capital, and Armistice Capital. 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 3.21% of its 13F portfolio. Jones Road Capital Management is also relatively very bullish on the stock, earmarking 1.82 percent of its 13F equity portfolio to BUD.

Seeing as Anheuser-Busch InBev SA/NV (NYSE:BUD) has witnessed a decline in interest from hedge fund managers, we can see that there was a specific group of hedge funds who were dropping their entire stakes heading into Q3. Interestingly, Lee Ainslie's Maverick Capital said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, valued at an estimated $3.3 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund said goodbye to about $0.6 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's also examine hedge fund activity in other stocks similar to Anheuser-Busch InBev SA/NV (NYSE:BUD). These stocks are The Boeing Company (NYSE:BA), Amgen, Inc. (NASDAQ:AMGN), The Charles Schwab Corporation (NYSE:SCHW), Lowe's Companies, Inc. (NYSE:LOW), Rio Tinto Group (NYSE:RIO), HDFC Bank Limited (NYSE:HDB), and Intuit Inc. (NASDAQ:INTU). All of these stocks' market caps resemble BUD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BA,59,1368946,0 AMGN,53,1651799,6 SCHW,72,4851670,-4 LOW,63,4968014,2 RIO,21,1420451,-4 HDB,39,1731917,12 INTU,66,5382791,-2 Average,53.3,3053655,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 53.3 hedge funds with bullish positions and the average amount invested in these stocks was $3054 million. That figure was $1234 million in BUD's case. The Charles Schwab Corporation (NYSE:SCHW) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Anheuser-Busch InBev SA/NV (NYSE:BUD) is even less popular than RIO. Our overall hedge fund sentiment score for BUD is 16. 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. Hedge funds dodged a bullet by taking a bearish stance towards BUD. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th but managed to beat the market again by 3.1 percentage points. Unfortunately BUD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); BUD investors were disappointed as the stock returned -15.6% since the end of the second quarter (through 11/5) 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 since 2019.

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