Hedge Fund Sentiment Unshaken by Sugar Taxes on Soda

#3 Dr Pepper Snapple Group Inc. (NYSE:DPS)
– Number of Hedge Fund Holders (as of March 31): 32
– Total Value of Hedge Fund Holdings (as of March 31): $1.94 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 11.60%

Although it isn’t as big as Coca-Cola or PepsiCo, Dr Pepper Snapple Group Inc. (NYSE:DPS) is still loved by the hedge fund crowd. A total of 32 elite funds held shares of the company at the end of March, unchanged from the previous quarter. Although shares of the company are roughly flat year-to-date, they are still near all-time highs and sport an attractive 2.3% dividend yield. Dr Pepper napple also reported solid earnings for its first quarter, beating both top and bottom line expectations. For 2016, the company expects core EPS at the high end of the previously communicated range of $4.20 to $4.30. Cliff Asness’ AQR Capital Management owned more than 2.5 million shares of Dr Pepper Snapple Group at the end of March.

#2 The Coca-Cola Co (NYSE:KO)
– Number of Hedge Fund Holders (as of March 31): 62
– Total Value of Hedge Fund Holdings (as of March 31): $22.81 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 11.40%

Although Coke might be detrimental if consumed in excess, Warren Buffett is still committed to drinking several cans of soda a day. Buffett’s habit is not only good news for Coca Cola’s overall demand, but also it is good for the stock’s sentiment. Having the world’s greatest investor’s fund own 400 million shares at the end of March goes a long way in the investing world, and is one of the reasons why The Coca-Cola Co (NYSE:KO) trades at an above-average 21 times forward earnings estimates. Also aiding the bullish cause for Coca-Cola is the company’s safe dividend of $1.40 a year, which represents a 3.18% dividend yield.

#1 PepsiCo, Inc. (NYSE:PEP)

– Number of Hedge Fund Holders (as of March 31): 65
– Total Value of Hedge Fund Holdings (as of March 31): $6 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 4.00%

A total of 65 funds out of those tracked by Insider Monkey held shares of PepsiCo, Inc. (NYSE:PEP) at the end of March, making the stock the most widely held big soda stock in the hedge fund universe. With its extensive snack brand portfolio, PepsiCo is more diversified than Coca-Cola and the company won’t suffer as much if more governments around the world pass sugar-taxes. PepsiCo is also slightly cheaper valuation-wise than its larger competitor, with PepsiCo sporting a forward P/E of 19.6 versus Coca-Cola’s 21. Analysts have a pretty bullish opinion on the stock, with a price target of $111.8 per share, giving PepsiCo more than 10% upside from current levels.

Disclosure: none