This Metric Says You Are Smart to Sell PepsiCo, Inc. (PEP)

Is PepsiCo, Inc. (NYSE:PEP) undervalued? Hedge funds are becoming less hopeful. The number of bullish hedge fund positions went down by 1 recently.

To the average investor, there are plenty of gauges investors can use to analyze their holdings. Some of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can outclass their index-focused peers by a significant amount (see just how much).

Just as important, optimistic insider trading activity is another way to break down the stock market universe. Just as you’d expect, there are a variety of motivations for an upper level exec to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the key action regarding PepsiCo, Inc. (NYSE:PEP).

What does the smart money think about PepsiCo, Inc. (NYSE:PEP)?

At Q1’s end, a total of 47 of the hedge funds we track held long positions in this stock, a change of -2% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially.

According to our comprehensive database, Yacktman Asset Management, managed by Donald Yacktman, holds the largest position in PepsiCo, Inc. (NYSE:PEP). Yacktman Asset Management has a $1.8231 billion position in the stock, comprising 9.3% of its 13F portfolio. The second largest stake is held by Nelson Peltz of Trian Partners, with a $951.8 million position; the fund has 20.3% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Ken Fisher’s Fisher Asset Management, Boykin Curry’s Eagle Capital Management and Jim Simons’s Renaissance Technologies.

Because PepsiCo, Inc. (NYSE:PEP) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds that decided to sell off their entire stakes in Q1. Intriguingly, Ralph V. Whitworth’s Relational Investors cut the largest stake of the “upper crust” of funds we key on, comprising close to $519.3 million in stock., and Howard Guberman of Gruss Asset Management was right behind this move, as the fund dumped about $83.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds in Q1.

Insider trading activity in PepsiCo, Inc. (NYSE:PEP)

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time period, PepsiCo, Inc. (NYSE:PEP) has seen 1 unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to PepsiCo, Inc. (NYSE:PEP). These stocks are Dr Pepper Snapple Group Inc. (NYSE:DPS), Coca-Cola Enterprises Inc (NYSE:CCE), Coca-Cola FEMSA, S.A.B. de C.V. (ADR) (NYSE:KOF), and The Coca-Cola Company (NYSE:KO). This group of stocks are in the beverages – soft drinks industry and their market caps are similar to PEP’s market cap.