Coca-Cola European Partners plc (CCEP): Hedge Funds Taking A Sip

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Coca-Cola European Partners plc (NYSE:CCEP) based on that data.

Is Coca-Cola European Partners plc (NYSE:CCEP) a cheap stock to buy now? Money managers are turning bullish. The number of long hedge fund positions advanced by 1 in recent months. Our calculations also showed that CCEP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the recent hedge fund action surrounding Coca-Cola European Partners plc (NYSE:CCEP).

How are hedge funds trading Coca-Cola European Partners plc (NYSE:CCEP)?

At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CCEP over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

The largest stake in Coca-Cola European Partners plc (NYSE:CCEP) was held by Citadel Investment Group, which reported holding $67.6 million worth of stock at the end of September. It was followed by Echo Street Capital Management with a $16.4 million position. Other investors bullish on the company included GLG Partners, D E Shaw, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Hengistbury Investment Partners allocated the biggest weight to Coca-Cola European Partners plc (NYSE:CCEP), around 2.89% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to CCEP.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Hengistbury Investment Partners, managed by Stuart Powers, created the most valuable position in Coca-Cola European Partners plc (NYSE:CCEP). Hengistbury Investment Partners had $12.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $11.2 million position during the quarter. The other funds with brand new CCEP positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Greg Eisner’s Engineers Gate Manager, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Coca-Cola European Partners plc (NYSE:CCEP) but similarly valued. These stocks are Snap Inc. (NYSE:SNAP), Tencent Music Entertainment Group (NYSE:TME), Simon Property Group, Inc (NYSE:SPG), and CMS Energy Corporation (NYSE:CMS). This group of stocks’ market values are closest to CCEP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNAP 48 929814 -18
TME 25 455610 -1
SPG 29 419445 3
CMS 28 421101 -2
Average 32.5 556493 -4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $556 million. That figure was $186 million in CCEP’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand Tencent Music Entertainment Group (NYSE:TME) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Coca-Cola European Partners plc (NYSE:CCEP) is even less popular than TME. Hedge funds dodged a bullet by taking a bearish stance towards CCEP. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately CCEP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); CCEP investors were disappointed as the stock returned 7.1% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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