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Do Hedge Funds Love Coca-Cola FEMSA, S.A.B. de C.V. (KOF)?

Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF).

Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) investors should pay attention to a decrease in support from the world’s most elite money managers recently. Our calculations also showed that KOF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

According to most investors, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, Our researchers choose to focus on the upper echelon of this group, about 850 funds. These money managers preside over most of all hedge funds’ total asset base, and by paying attention to their best investments, Insider Monkey has identified a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Wall Street Bull

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 this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the latest hedge fund action encompassing Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF).

What does smart money think about Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF)?

At the end of the fourth quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in KOF over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Bill & Melinda Gates Foundation Trust, managed by Michael Larson, holds the number one position in Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF). Bill & Melinda Gates Foundation Trust has a $376.7 million position in the stock, comprising 1.8% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, with a $97.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Paul Marshall and Ian Wace’s Marshall Wace LLP, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Bill & Melinda Gates Foundation Trust allocated the biggest weight to Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), around 1.76% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, designating 0.31 percent of its 13F equity portfolio to KOF.

Because Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers who were dropping their entire stakes last quarter. It’s worth mentioning that Matthew Tewksbury’s Stevens Capital Management dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at about $0.6 million in stock, and Minhua Zhang’s Weld Capital Management was right behind this move, as the fund sold off about $0.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF). These stocks are Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), Kennedy-Wilson Holdings Inc (NYSE:KW), Allogene Therapeutics, Inc. (NASDAQ:ALLO), and CONMED Corporation (NYSE:CNMD). This group of stocks’ market values match KOF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DCPH 28 699426 2
KW 17 508765 -2
ALLO 12 114946 6
CNMD 31 270901 7
Average 22 398510 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $399 million. That figure was $493 million in KOF’s case. CONMED Corporation (NYSE:CNMD) is the most popular stock in this table. On the other hand Allogene Therapeutics, Inc. (NASDAQ:ALLO) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is even less popular than ALLO. Hedge funds dodged a bullet by taking a bearish stance towards KOF. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately KOF wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); KOF investors were disappointed as the stock returned -33.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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