Should You Avoid Kraft Foods Group Inc (KRFT)?

Page 1 of 2

Kraft Foods Group Inc (NASDAQ:KRFT) was in 29 hedge funds’ portfolio at the end of March. KRFT investors should be aware of a decrease in hedge fund interest of late. There were 38 hedge funds in our database with KRFT positions at the end of the previous quarter.

Kraft Foods Group Inc (NASDAQ:KRFT)If you’d ask most market participants, hedge funds are seen as slow, outdated investment tools of the past. While there are over 8000 funds with their doors open today, we at Insider Monkey look at the leaders of this group, close to 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by keeping an eye on their best stock picks, we have come up with a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, optimistic insider trading sentiment is a second way to break down the marketplace. Obviously, there are many stimuli for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this method if investors understand what to do (learn more here).

With all of this in mind, it’s important to take a peek at the key action surrounding Kraft Foods Group Inc (NASDAQ:KRFT).

What have hedge funds been doing with Kraft Foods Group Inc (NASDAQ:KRFT)?

At the end of the first quarter, a total of 29 of the hedge funds we track were long in this stock, a change of -24% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Tiger Consumer Management, managed by Patrick McCormack, holds the biggest position in Kraft Foods Group Inc (NASDAQ:KRFT). Tiger Consumer Management has a $122.2 million position in the stock, comprising 4.9% of its 13F portfolio. The second largest stake is held by Phill Gross and Robert Atchinson of Adage Capital Management, with a $104.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include D. E. Shaw’s D E Shaw, Warren Buffett’s Berkshire Hathaway and Clint Carlson’s Carlson Capital.

Judging by the fact that Kraft Foods Group Inc (NASDAQ:KRFT) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that elected to cut their full holdings last quarter. Intriguingly, Joe DiMenna’s ZWEIG DIMENNA PARTNERS dumped the largest position of all the hedgies we monitor, valued at an estimated $22.4 million in stock., and Nick Niell of Arrowgrass Capital Partners was right behind this move, as the fund cut about $15.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 9 funds last quarter.

How have insiders been trading Kraft Foods Group Inc (NASDAQ:KRFT)?

Insider buying is best served when the primary stock in question has seen transactions within the past 180 days. Over the latest 180-day time frame, Kraft Foods Group Inc (NASDAQ:KRFT) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Kraft Foods Group Inc (NASDAQ:KRFT). These stocks are Post Holdings Inc (NYSE:POST), Lancaster Colony Corp. (NASDAQ:LANC), The WhiteWave Foods Co (NYSE:WWAV), Unilever plc (ADR) (NYSE:UL), and H.J. Heinz Company (NYSE:HNZ). All of these stocks are in the 0 industry and their market caps resemble KRFT’s market cap.

Page 1 of 2