We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Mondelez International Inc (NASDAQ:MDLZ) and determine whether hedge funds skillfully traded this stock.
Is Mondelez International Inc (NASDAQ:MDLZ) a bargain? Prominent investors were getting less bullish. The number of long hedge fund positions fell by 7 recently. Mondelez International Inc (NASDAQ:MDLZ) was in 46 hedge funds’ portfolios at the end of September. The all time high for this statistic is 69. Our calculations also showed that MDLZ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 53 hedge funds in our database with MDLZ positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s view the recent hedge fund action regarding Mondelez International Inc (NASDAQ:MDLZ).
John Overdeck of Two Sigma Advisors
Do Hedge Funds Think MDLZ Is A Good Stock To Buy Now?
At Q3’s end, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in MDLZ over the last 25 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Mondelez International Inc (NASDAQ:MDLZ) was held by Trian Partners, which reported holding $465.3 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $385.5 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Hillhouse Capital Management. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to Mondelez International Inc (NASDAQ:MDLZ), around 5.78% of its 13F portfolio. Hillhouse Capital Management is also relatively very bullish on the stock, dishing out 1.42 percent of its 13F equity portfolio to MDLZ.
Since Mondelez International Inc (NASDAQ:MDLZ) has faced bearish sentiment from hedge fund managers, it’s safe to say that there were a few hedge funds who sold off their full holdings in the third quarter. It’s worth mentioning that Matthew Stadelman’s Diamond Hill Capital dropped the largest investment of all the hedgies followed by Insider Monkey, totaling about $598.1 million in stock. Steve Cohen’s fund, Point72 Asset Management, also cut its stock, about $76.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 7 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Mondelez International Inc (NASDAQ:MDLZ). We will take a look at British American Tobacco plc (NYSE:BTI), Enbridge Inc (NYSE:ENB), Lam Research Corporation (NASDAQ:LRCX), Micron Technology, Inc. (NASDAQ:MU), Dell Technologies Inc. (NYSE:DELL), The TJX Companies, Inc. (NYSE:TJX), and Truist Financial Corporation (NYSE:TFC). This group of stocks’ market values resemble MDLZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BTI | 9 | 724383 | -3 |
| ENB | 24 | 211478 | 5 |
| LRCX | 47 | 3519311 | -11 |
| MU | 63 | 3841359 | -24 |
| DELL | 60 | 6142951 | -2 |
| TJX | 63 | 2330294 | 7 |
| TFC | 34 | 275906 | -5 |
| Average | 42.9 | 2435097 | -4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.9 hedge funds with bullish positions and the average amount invested in these stocks was $2435 million. That figure was $1922 million in MDLZ’s case. Micron Technology, Inc. (NASDAQ:MU) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 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 52.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on MDLZ as the stock returned 15.8% since the end of Q3 (through 1/31) 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.
