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Kraft Heinz Co (KHC): Hedge Funds Are Snapping Up; Signs of Confidence in Post-Merger Synergies

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There is a high variety of “time-tested” methods for successful stock selection, but most of them seem to be rather focused on short-termism. Retail investors usually use various quantitative filters in computerized screening tools to narrow down the pool of stocks that fit their investing strategies and styles. However, most quantitative stock screening tools or methods tend to have a strong style bias, which simply means that they focus too much on sales and earnings growth, P/E multiples, or price changes. There is another approach investors can use to select stocks, which involves tracking the basket of most-loved stocks among hedge funds or simply seekeing those stocks that receive the most attention from the smart money industry during a specific period of time. The Insider Monkey team has gone over 700 quarterly 13F filings that hedge funds and prominent investors are required to file each three-month period. The most recent round of 13F filings shows the funds’ and investors’ portfolio positions as of December 31. In this article, we look at what those funds think of Kraft Heinz Co (NASDAQ:KHC) based on that data.

Kraft Heinz Co (NASDAQ:KHC) investors should be aware of an increase in support from the world’s most elite money managers lately. At the end of this article we will also compare KHC to other stocks including Schlumberger Limited. (NYSE:SLB), Mitsubishi UFJ Financial Group Inc (ADR) (NYSE:MTU), and AstraZeneca plc (ADR) (NYSE:AZN) to get a better sense of its popularity.

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According to most traders, hedge funds are seen as underperforming, old investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts hone in on the top tier of this club, approximately 700 funds. These investment experts shepherd the majority of the smart money’s total asset base, and by keeping track of their first-class equity investments, Insider Monkey has brought to light many investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Kraft Heinz Co (NASDAQ:KHC), one of the world’s largest food and beverage companies, has seen its stock gain nearly 5% since the beginning of 2016. Most market participants already know that Kraft Heinz emerged following the combination of food and beverage conglomerates H.J. Heinz Co. and The Kraft Foods Group; a multi-billion-dollar merger orchestrated by renowned investor Warren Buffet and investment firm 3G Capital. Nonetheless, the freshly-combined company has been struggling to drive up revenue growth in the subsequent months after the merger; Kraft Heinz’s pro forma net sales (assuming Kraft and Heinz were combined during both fiscal 2015 and 2014) decreased 5.8% during the fiscal year that ended January 3 to $27.45 billion. The decrease was mainly driven by unfavorable impacts of foreign exchange rates and divestitures. At the same time, the company’s pro forma organic net sales dropped by 1.6% year-on-year, partly due to lower shipments in refreshment beverages, frozen meals, foodservice and boxed dinners in the United States and Canada. However, investors may be well aware that the mega-merger between the two companies was not solely about driving revenue growth, but it was rather intended to achieve strong synergies through cost cutting measures. These cost savings could be mainly targeted at workforce reductions and closing down inefficient manufacturing facilities, so it might take a while until investors get to fully see the benefits of this merger.

Now, we’re going to review the recent action regarding Kraft Heinz Co (NASDAQ:KHC).

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