Starbucks Corporation (NASDAQ:SBUX) is trending today after the company announced that it intends to open its first roastery outside of the United States, which will be located in Shanghai, China and is expected to open in 2017. Given its large population, China is a very important growth market for Starbucks. The chain currently has over 2,000 stores in 100 cities in the country and is adding around ten new stores each week. If China succeeds in growing its middle class to over 600 million people over the next decade and many become hooked on Starbucks’ products, the growth prospects for the company would be enormous. Shares of Starbucks are up very slightly in morning trading today.
How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors (see the details here). With this in mind, let’s take a look at the recent hedge fund activity surrounding Starbucks Corporation (NASDAQ:SBUX).
Starbucks Corporation (NASDAQ:SBUX) was in 52 hedge funds’ portfolios at the end of the first quarter of 2016. SBUX has seen a decrease in activity from the world’s largest hedge funds recently. There were 61 hedge funds in our database with SBUX positions at the end of the previous quarter. 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 Honeywell International Inc. (NYSE:HON), Royal Bank of Canada (USA) (NYSE:RY), and The Boeing Company (NYSE:BA) to gather more data points.
Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Starbucks Corporation (NASDAQ:SBUX). Arrowstreet Capital has a $341.4 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $131.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish contain Paul Marshall and Ian Wace’s Marshall Wace LLP, David Stemerman’s Conatus Capital Management, and David Harding’s Winton Capital Management.
On the next page we’ll look at some funds that sold off positions in Starbucks during Q1, as well as compare the stock to a handful of others with similar market caps.