There’s been a flurry of analyst updates today involving numerous notable companies, and we have the details on three of them in this article. The companies in question are The Coca-Cola Co (NYSE:KO), Big Lots, Inc. (NYSE:BIG), and Intel Corporation (NASDAQ:INTC), and we’ll look at what analysts have to say about them and what hedge funds think about them in this article.
Let’s start with The Coca-Cola Co (NYSE:KO), a popular dividend king that has been paying increased dividends annually for the last 53 years. Deutsche Bank started coverage of the soft drink giant today (what took them so long?) with a ‘Buy’ rating and a $45 price target. Given the 2% rise in Coca-Cola’s shares today, that price target represents upside of about 12.5%.
Recently named one of the Brands of the Year at the World Branding Awards in London, The Coca-Cola Co (NYSE:KO) is an extremely popular stock among the elite investors we track, ranking as one of the mega-cap stocks they have amassed a substantial position in. 62 investors in our database have long positions in Coca-Cola valued at over $19.53 billion, owning 11.40% of its shares in the process. Warren Buffett contributes significantly to the latter total, owning 400.0 million shares worth over $15.69 billion.
Hedge funds and other big money managers like Buffett tend to have the largest amounts of their capital invested in large and mega-cap stocks like The Coca-Cola Co because these companies allow for much greater capital allocation. That’s why if we take a look at the most popular stocks among funds, we won’t find any mid- or small-cap stocks there. However, our backtests of hedge funds’ equity portfolios between 1999 and 2012 revealed that the 50 most popular stocks among hedge funds underperformed the market by seven basis points per month, showing that their most popular picks and the ones that received the bulk of their capital were not actually their best picks. On the other hand, their top small-cap picks performed considerably better, outperforming the market by 95 basis points per month. This was confirmed through backtesting and in forward tests of our small-cap strategy since August 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds has provided gains of 118%, beating the broader market by over 60 percentage points (see the details).
Let’s move on to Intel Corporation (NASDAQ:INTC), which was upgraded today by JMP Securities to ‘Market Perform’ from ‘Underperform’, mirroring the exact same upgrade made two days earlier by Bernstein. JMP notes that checks suggest a stronger fourth quarter lies ahead for the company, which had struggled under the weight of the falling PC industry. After slight gains on Wednesday following the Bernstein upgrade, investors were back to selling the stock yesterday, as it gave back all of Wednesday’s gains. It is back in positive territory today, up by just under 2%.
As we noted Wednesday, investor sentiment in Intel Corporation (NASDAQ:INTC) among those that we monitor was not good during the second quarter, as funds with long positions in the stock fell to 48 from 61, while the value of their holdings declined by about $1 billion to $4.21 billion. Those investors held just 2.90% of Intel’s outstanding shares. As of June 30, First Eagle Investment Management held the largest stake in Intel of the firms we track, at 28.48 million shares. Jim Simons’ Renaissance Technologies and Rob Citrone’s Discovery Capital Management were among the firms closing their positions in the chipmaker’s stock.