While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Keurig Dr Pepper Inc. (NASDAQ:KDP).
Keurig Dr Pepper Inc. (NASDAQ:KDP) shareholders have witnessed an increase in support from the world’s most elite money managers lately. Keurig Dr Pepper Inc. (NASDAQ:KDP) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 41. There were 28 hedge funds in our database with KDP holdings at the end of June. Our calculations also showed that KDP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to analyze the latest hedge fund action encompassing Keurig Dr Pepper Inc. (NASDAQ:KDP).
Do Hedge Funds Think KDP Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards KDP over the last 25 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Keurig Dr Pepper Inc. (NASDAQ:KDP) was held by Cedar Rock Capital, which reported holding $376.6 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $272 million position. Other investors bullish on the company included Renaissance Technologies, RIT Capital Partners, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position RIT Capital Partners allocated the biggest weight to Keurig Dr Pepper Inc. (NASDAQ:KDP), around 30.86% of its 13F portfolio. Cedar Rock Capital is also relatively very bullish on the stock, designating 9.03 percent of its 13F equity portfolio to KDP.
Consequently, specific money managers have jumped into Keurig Dr Pepper Inc. (NASDAQ:KDP) headfirst. RIT Capital Partners, managed by Jacob Rothschild, initiated the biggest position in Keurig Dr Pepper Inc. (NASDAQ:KDP). RIT Capital Partners had $79.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $31.2 million position during the quarter. The other funds with brand new KDP positions are Sander Gerber’s Hudson Bay Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Donald Sussman’s Paloma Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Keurig Dr Pepper Inc. (NASDAQ:KDP) but similarly valued. We will take a look at Coupang, Inc. (NYSE:CPNG), Wipro Limited (NYSE:WIT), Marriott International Inc (NYSE:MAR), Twitter Inc (NYSE:TWTR), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), Coinbase Global Inc. (NASDAQ:COIN), and Eni SpA (NYSE:E). This group of stocks’ market valuations match KDP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPNG | 45 | 10769505 | 12 |
| WIT | 15 | 183023 | 1 |
| MAR | 39 | 2878858 | -10 |
| TWTR | 94 | 6305635 | 5 |
| SMFG | 11 | 50245 | 0 |
| COIN | 50 | 2968201 | 1 |
| E | 3 | 75414 | 0 |
| Average | 36.7 | 3318697 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.7 hedge funds with bullish positions and the average amount invested in these stocks was $3319 million. That figure was $1270 million in KDP’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 3 bullish hedge fund positions. Keurig Dr Pepper Inc. (NASDAQ:KDP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KDP is 50.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately KDP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KDP investors were disappointed as the stock returned -0.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Keurig Dr Pepper Inc. (NYSE:KDP)
Follow Keurig Dr Pepper Inc. (NYSE:KDP)
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Disclosure: None. This article was originally published at Insider Monkey.
