Hedge Funds Are Selling The Kraft Heinz Company (KHC)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards The Kraft Heinz Company (NASDAQ:KHC) changed recently.

The Kraft Heinz Company (NASDAQ:KHC) was in 33 hedge funds’ portfolios at the end of March. The all time high for this statistic is 60. KHC has experienced a decrease in hedge fund sentiment lately. There were 36 hedge funds in our database with KHC positions at the end of the fourth quarter. Our calculations also showed that KHC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most traders, hedge funds are seen as underperforming, outdated investment vehicles of years past. While there are over 8000 funds with their doors open today, Our researchers look at the top tier of this group, around 850 funds. These investment experts direct most of the smart money’s total capital, and by shadowing their best equity investments, Insider Monkey has determined many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the fresh hedge fund action regarding The Kraft Heinz Company (NASDAQ:KHC).

Do Hedge Funds Think KHC Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KHC over the last 23 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Among these funds, Berkshire Hathaway held the most valuable stake in The Kraft Heinz Company (NASDAQ:KHC), which was worth $13025.4 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $82.6 million worth of shares. Bridgewater Associates, Scion Asset Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Berkshire Hathaway allocated the biggest weight to The Kraft Heinz Company (NASDAQ:KHC), around 4.82% of its 13F portfolio. Scion Asset Management is also relatively very bullish on the stock, dishing out 3.47 percent of its 13F equity portfolio to KHC.

Judging by the fact that The Kraft Heinz Company (NASDAQ:KHC) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their entire stakes in the first quarter. Intriguingly, Steven Boyd’s Armistice Capital sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $13.9 million in stock. Richard SchimeláandáLawrence Sapanski’s fund, Cinctive Capital Management, also dropped its stock, about $4.9 million worth. These transactions are important to note, as total hedge fund interest fell by 3 funds in the first quarter.

Let’s go over hedge fund activity in other stocks similar to The Kraft Heinz Company (NASDAQ:KHC). We will take a look at Relx PLC (NYSE:RELX), Dollar General Corp. (NYSE:DG), Keurig Dr Pepper Inc. (NASDAQ:KDP), Newmont Corporation (NYSE:NEM), Monster Beverage Corp (NASDAQ:MNST), Marriott International Inc (NASDAQ:MAR), and Enterprise Products Partners L.P. (NYSE:EPD). This group of stocks’ market caps are similar to KHC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RELX 4 85198 -4
DG 52 2341556 -5
KDP 30 934902 1
NEM 43 994802 -7
MNST 45 2382495 1
MAR 58 3068754 0
EPD 26 299289 -4
Average 36.9 1443857 -2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $1444 million. That figure was $13335 million in KHC’s case. Marriott International Inc (NASDAQ:MAR) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 4 bullish hedge fund positions. The Kraft Heinz Company (NASDAQ:KHC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KHC is 45.4. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately KHC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KHC investors were disappointed as the stock returned 1.9% since the end of March (through 7/2) 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.

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