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Was The Smart Money Right About Mondelez International Inc (MDLZ)?

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·6 min read
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  • MDLZ

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Mondelez International Inc (NASDAQ:MDLZ).

Is Mondelez International Inc (NASDAQ:MDLZ) going to take off soon? Prominent investors were betting on the stock. The number of long hedge fund bets moved up by 8 recently. Mondelez International Inc (NASDAQ:MDLZ) was in 53 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 69. Our calculations also showed that MDLZ isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 45 hedge funds in our database with MDLZ positions at the end of the first quarter.

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.


Nelson Peltz of Trian Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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. Keeping this in mind we're going to take a gander at the fresh hedge fund action regarding Mondelez International Inc (NASDAQ:MDLZ).

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

At the end of the second quarter, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. On the other hand, there were a total of 54 hedge funds with a bullish position in MDLZ a year ago. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Is MDLZ A Good Stock To Buy?
Is MDLZ A Good Stock To Buy?

The largest stake in Mondelez International Inc (NASDAQ:MDLZ) was held by Diamond Hill Capital, which reported holding $598.1 million worth of stock at the end of June. It was followed by Trian Partners with a $539.4 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to Mondelez International Inc (NASDAQ:MDLZ), around 6.31% of its 13F portfolio. Kehrs Ridge Capital is also relatively very bullish on the stock, designating 3.82 percent of its 13F equity portfolio to MDLZ.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, initiated the most outsized position in Mondelez International Inc (NASDAQ:MDLZ). Holocene Advisors had $126.7 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $76.4 million position during the quarter. The other funds with brand new MDLZ positions are Brian Scudieri's Kehrs Ridge Capital, Ryan Caldwell's Chiron Investment Management, and Andrew Weiss's Weiss Asset Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mondelez International Inc (NASDAQ:MDLZ) but similarly valued. These stocks are NIO Inc. (NYSE:NIO), Gilead Sciences, Inc. (NASDAQ:GILD), General Motors Company (NYSE:GM), U.S. Bancorp (NYSE:USB), Automatic Data Processing (NASDAQ:ADP), Crown Castle International Corp. (NYSE:CCI), and ConocoPhillips (NYSE:COP). This group of stocks' market caps resemble MDLZ's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NIO,34,2066911,6 GILD,54,1732734,-11 GM,86,7414862,0 USB,41,8305634,-2 ADP,41,3018791,-1 CCI,42,2093903,-1 COP,50,1158596,-1 Average,49.7,3684490,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.7 hedge funds with bullish positions and the average amount invested in these stocks was $3684 million. That figure was $2947 million in MDLZ's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 34 bullish hedge fund positions. Mondelez International Inc (NASDAQ:MDLZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MDLZ is 51.3. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds 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 and beat the market again by 3.1 percentage points. Unfortunately MDLZ wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MDLZ were disappointed as the stock returned 0.3% since the end of June (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 many of these stocks already outperformed the market since 2019.

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