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Did Hedge Funds Make The Right Call On Molson Coors Beverage Company (TAP)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtMolson Coors Beverage Company (NYSE:TAP) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Molson Coors Beverage Company (NYSE:TAP) has seen an increase in hedge fund sentiment recently. Our calculations also showed that TAP 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Rogers Ariel Investments

John Rogers of Ariel Investments

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the recent hedge fund action regarding Molson Coors Beverage Company (NYSE:TAP).

Hedge fund activity in Molson Coors Beverage Company (NYSE:TAP)

At Q1’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TAP over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is TAP A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the largest position in Molson Coors Beverage Company (NYSE:TAP). AQR Capital Management has a $60.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Ariel Investments, led by John W. Rogers, holding a $58 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Ric Dillon’s Diamond Hill Capital, Seth Rosen’s Nitorum Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Callodine Capital Management allocated the biggest weight to Molson Coors Beverage Company (NYSE:TAP), around 3.97% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, designating 2.23 percent of its 13F equity portfolio to TAP.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in Molson Coors Beverage Company (NYSE:TAP). Arrowstreet Capital had $15.4 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $1.6 million position during the quarter. The following funds were also among the new TAP investors: Qing Li’s Sciencast Management, Dmitry Balyasny’s Balyasny Asset Management, and Mike Vranos’s Ellington.

Let’s go over hedge fund activity in other stocks similar to Molson Coors Beverage Company (NYSE:TAP). These stocks are Concho Resources Inc. (NYSE:CXO), Cna Financial Corporation (NYSE:CNA), Kirkland Lake Gold Ltd. (NYSE:KL), and Huntington Bancshares Incorporated (NASDAQ:HBAN). This group of stocks’ market caps resemble TAP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CXO 31 492191 -8
CNA 12 51546 -3
KL 28 552273 4
HBAN 29 85788 4
Average 25 295450 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $295 million. That figure was $259 million in TAP’s case. Concho Resources Inc. (NYSE:CXO) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Molson Coors Beverage Company (NYSE:TAP) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately TAP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TAP were disappointed as the stock returned -11.9% during the second quarter 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 in 2020.

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