The consumer non-durables industry, a branch of the consumer goods sector, includes companies that produce goods that are immediately used by a consumer and have a life span of less than three years. In the past three months, the consumer goods sector has advanced by roughly 4.5%, slower than the S&P 500 that rose by 7.5%. Year-to-date, however, it’s the opposite: the S&P 500 trails the sector index by more than one percentage point. In this article, we’ll take a look at five stocks from the consumer non-durables industry that top hedge funds liked the best heading into the second quarter.
At Insider Monkey, we track around 770 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Is Coca-Cola Poised For A Comeback?
Number five in this group is Warren Buffett‘s darling, The Coca-Cola Co (NYSE:KO). Despite increased criticism, Buffett’s faith in the soft drink giant is undeterred. Berkshire Hathaway’s stake in Coca-Cola was established back in 2001 and currently amounts to 400 million shares worth more than $18.5 billion. Investment legend Stanley Druckenmiller is also betting on The Coca-Cola Co (NYSE:KO) to grow again, having established a fresh position for his family office during the first quarter. According to its latest 13F filing, Duquesne Capital holds 1.39 million sahres of the fizzy drink giant. In general, hedge fund sentiment towards Coca-Cola improved significantly during the first three months, as the number of long positions rose to 62 from 51 at the end of December. 2016 first quarter sales were down again, as The Coca-Cola Co (NYSE:KO) was hurt by currency swings and the recent trends towards healthier drinks. The company posted $10.3 billion in revenue, down 4% year-over-year, and a profit of $0.34 per share. Coca-Cola is also looking to consolidate its European subsidiaries into one entity, a move that could lead to $375 million in savings in the first three years.
Snacks Business Still Hot
At the end of the first quarter, Mondelez International Inc (NASDAQ:MDLZ) could be found in the portfolio of 63 elite hedge funds, up from 57 a quarter before. Activist Nelson Peltz is heavily invested in this stock, having further increased his fund’s stake by 1% during the quarter. Trian Partners reportedly holds a little over 48 million shares worth $1.93 billion. Elsewhere, Bill Ackman’s Pershing Square dumped 48% of its stake in Mondelez International Inc (NASDAQ:MDLZ) and its latest 13F filing indicates ownership of 22.9 million shares, although in a letter to investors, Ackman said that the position was reduced for portfolio management reasons. The maker of Oreo cookies had a strong first quarter, but the management refrained from upping their forward guidance. Financial office Brian Gladden said demand is rather weak at the moment, especially in emerging markets and the strong dollar is not helping either. Mondelez International Inc (NASDAQ:MDLZ) said it is still on track to achieve 2% organic revenue growth and operating margins of 15% to 16% for the full year.
On the next page we’ll take a look at the top three stocks from this group.