Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Starbucks Corporation (NASDAQ:SBUX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Starbucks Corporation (NASDAQ:SBUX) a good stock to buy now? SBUX was in 66 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 68. SBUX has experienced an increase in hedge fund sentiment lately. There were 54 hedge funds in our database with SBUX positions at the end of the second quarter. Our calculations also showed that SBUX 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Starbucks Corporation (NASDAQ:SBUX).
How are hedge funds trading Starbucks Corporation (NASDAQ:SBUX)?
At the end of September, a total of 66 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SBUX over the last 21 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.
The largest stake in Starbucks Corporation (NASDAQ:SBUX) was held by Pershing Square, which reported holding $870.5 million worth of stock at the end of September. It was followed by Cedar Rock Capital with a $689.3 million position. Other investors bullish on the company included Fisher Asset Management, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Pacifica Capital Investments allocated the biggest weight to Starbucks Corporation (NASDAQ:SBUX), around 16.39% of its 13F portfolio. Cedar Rock Capital is also relatively very bullish on the stock, setting aside 15.68 percent of its 13F equity portfolio to SBUX.
Now, specific money managers were leading the bulls’ herd. Junto Capital Management, managed by James Parsons, assembled the biggest position in Starbucks Corporation (NASDAQ:SBUX). Junto Capital Management had $108.5 million invested in the company at the end of the quarter. Brian Scudieri’s Kehrs Ridge Capital also initiated a $11.2 million position during the quarter. The other funds with brand new SBUX positions are John Smith Clark’s Southpoint Capital Advisors, Matthew Tewksbury’s Stevens Capital Management, and Louis Bacon’s Moore Global Investments.
Let’s now take a look at hedge fund activity in other stocks similar to Starbucks Corporation (NASDAQ:SBUX). We will take a look at Royal Bank of Canada (NYSE:RY), Wells Fargo & Company (NYSE:WFC), Advanced Micro Devices, Inc. (NASDAQ:AMD), GlaxoSmithKline plc (NYSE:GSK), Sony Corporation (NYSE:SNE), The Boeing Company (NYSE:BA), and ServiceNow Inc (NYSE:NOW). This group of stocks’ market valuations match SBUX’s market valuation.
|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 51.3 hedge funds with bullish positions and the average amount invested in these stocks was $3358 million. That figure was $3259 million in SBUX’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 bullish hedge fund positions. Starbucks Corporation (NASDAQ:SBUX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBUX is 72.9. 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. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on SBUX as the stock returned 15.4% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.