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How Did Mondelez International Inc (MDLZ) Compare Against Top Hedge Fund Stocks in 2019?

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Mondelez International Inc (NASDAQ:MDLZ).

Is Mondelez International Inc (NASDAQ:MDLZ) a good investment now? The smart money is taking a bullish view. The number of long hedge fund bets moved up by 5 lately. Our calculations also showed that MDLZ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

TRIAN PARTNERS

Nelson Peltz of Trian Partners

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s go over the fresh hedge fund action encompassing Mondelez International Inc (NASDAQ:MDLZ).

What have hedge funds been doing with Mondelez International Inc (NASDAQ:MDLZ)?

At the end of the third quarter, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MDLZ over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MDLZ A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Nelson Peltz’s Trian Partners has the biggest position in Mondelez International Inc (NASDAQ:MDLZ), worth close to $1.0416 billion, amounting to 10.9% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $232.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise David E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to Mondelez International Inc (NASDAQ:MDLZ), around 10.87% of its 13F portfolio. Tremblant Capital is also relatively very bullish on the stock, designating 3.44 percent of its 13F equity portfolio to MDLZ.

Consequently, key hedge funds have been driving this bullishness. Hillhouse Capital Management, managed by Lei Zhang, created the biggest position in Mondelez International Inc (NASDAQ:MDLZ). Hillhouse Capital Management had $140.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $65.1 million investment in the stock during the quarter. The following funds were also among the new MDLZ investors: Ricky Sandler’s Eminence Capital, Brett Barakett’s Tremblant Capital, and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Let’s now review hedge fund activity in other stocks similar to Mondelez International Inc (NASDAQ:MDLZ). These stocks are General Electric Company (NYSE:GE), Altria Group Inc (NYSE:MO), CME Group Inc (NASDAQ:CME), and Goldman Sachs Group, Inc. (NYSE:GS). This group of stocks’ market caps match MDLZ’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GE 51 4455114 -5
MO 47 1364557 9
CME 46 2245287 7
GS 72 8237468 11
Average 54 4075607 5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $4076 million. That figure was $2813 million in MDLZ’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand CME Group Inc (NASDAQ:CME) is the least popular one with only 46 bullish hedge fund positions. Mondelez International Inc (NASDAQ:MDLZ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on MDLZ, though not to the same extent, as the stock returned 38.8% in 2019 (as of 12/23) and outperformed the market.
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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