Is Coca-Cola Enterprises Inc (NYSE:CCE) undervalued? The smart money is becoming less confident. The number of long hedge fund positions retreated by 6 in recent months.
In the financial world, there are a multitude of gauges shareholders can use to monitor publicly traded companies. A duo of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can outclass the market by a very impressive amount (see just how much).
Equally as key, positive insider trading activity is another way to break down the stock market universe. Obviously, there are a number of reasons for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the useful potential of this strategy if "monkeys" know what to do (learn more here).
Keeping this in mind, we're going to take a peek at the latest action regarding Coca-Cola Enterprises Inc (NYSE:CCE).
Heading into Q2, a total of 23 of the hedge funds we track were long in this stock, a change of -21% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes significantly.
Of the funds we track, James Crichton and Adam Weiss's Scout Capital Management had the biggest position in Coca-Cola Enterprises Inc (NYSE:CCE), worth close to $151.4 million, accounting for 1.9% of its total 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $127.2 million position; 0.4% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Barry Rosenstein's JANA Partners, Daniel S. Och's OZ Management and Jim Simons's Renaissance Technologies.
Judging by the fact that Coca-Cola Enterprises Inc (NYSE:CCE) has experienced falling interest from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of money managers that slashed their positions entirely last quarter. It's worth mentioning that Dan Loeb's Third Point dropped the biggest position of all the hedgies we key on, worth close to $79.3 million in stock.. John Lykouretzos's fund, Hoplite Capital Management, also cut its stock, about $39.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.
Insider trading activity, especially when it's bullish, is best served when the company in focus has experienced transactions within the past half-year. Over the last half-year time period, Coca-Cola Enterprises Inc (NYSE:CCE) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity in other stocks similar to Coca-Cola Enterprises Inc (NYSE:CCE). These stocks are Monster Beverage Corp (NASDAQ:MNST) and Dr Pepper Snapple Group Inc. (NYSE:DPS). This group of stocks belong to the beverages - soft drinks industry and their market caps resemble CCE's market cap.