The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Mondelez International Inc (NASDAQ:MDLZ).
Is MDLZ a good stock to buy now? Mondelez International Inc (NASDAQ:MDLZ) was in 50 hedge funds’ portfolios at the end of September. The all time high for this statistics is 69. MDLZ has seen a decrease in hedge fund sentiment in recent months. There were 54 hedge funds in our database with MDLZ holdings at the end of June. 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 for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 S&P 500 ETFs by 66 percentage points since March 2017 (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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. Now let’s analyze the recent hedge fund action regarding Mondelez International Inc (NASDAQ:MDLZ).
What does smart money think about Mondelez International Inc (NASDAQ:MDLZ)?
At third quarter’s end, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MDLZ over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Trian Partners, managed by Nelson Peltz, holds the most valuable position in Mondelez International Inc (NASDAQ:MDLZ). Trian Partners has a $703.3 million position in the stock, comprising 11.6% of its 13F portfolio. On Trian Partners’s heels is Diamond Hill Capital, managed by Ric Dillon, which holds a $440.1 million position; 2.4% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Lei Zhang’s Hillhouse Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to Mondelez International Inc (NASDAQ:MDLZ), around 11.62% of its 13F portfolio. Kehrs Ridge Capital is also relatively very bullish on the stock, designating 9.05 percent of its 13F equity portfolio to MDLZ.
Judging by the fact that Mondelez International Inc (NASDAQ:MDLZ) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedge funds that slashed their full holdings by the end of the third quarter. It’s worth mentioning that Greg Poole’s Echo Street Capital Management dropped the biggest investment of the 750 funds followed by Insider Monkey, comprising an estimated $61 million in stock, and Ian Simm’s Impax Asset Management was right behind this move, as the fund said goodbye to about $18.4 million worth. These moves are important to note, as total hedge fund interest fell by 4 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Mondelez International Inc (NASDAQ:MDLZ) but similarly valued. We will take a look at Caterpillar Inc. (NYSE:CAT), American Express Company (NYSE:AXP), Diageo plc (NYSE:DEO), HSBC Holdings plc (NYSE:HSBC), Gilead Sciences, Inc. (NASDAQ:GILD), The Estee Lauder Companies Inc (NYSE:EL), and Target Corporation (NYSE:TGT). This group of stocks’ market values match MDLZ’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.3 hedge funds with bullish positions and the average amount invested in these stocks was $4263 million. That figure was $2675 million in MDLZ’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 10 bullish hedge fund positions. Mondelez International Inc (NASDAQ:MDLZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MDLZ is 62. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately MDLZ wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MDLZ were disappointed as the stock returned 1.2% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.