Why Is The Coca-Cola Co (KO) Bleeding Smart Money?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small-caps are where they can generate significant outperformance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Is The Coca-Cola Co (NYSE:KO) a good investment today? Hedge funds are becoming less confident. The number of long hedge fund positions went down by 2 recently. KO was in 53 hedge funds’ portfolios at the end of September. There were 55 hedge funds in our database with KO holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks, or vice-versa. That’s why at the end of this article we will examine companies such as Oracle Corporation (NASDAQ:ORCL), Fomento Economico Mexicano SAB (ADR) (NYSE:FMX), and Visa Inc (NYSE:V) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What have hedge funds been doing with The Coca-Cola Co (NYSE:KO)?

Heading into the fourth quarter of 2016, a total of 53 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 4% dip from the previous quarter and the second straight quarter with declining sentiment for the stock. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the most valuable position in The Coca-Cola Co (NYSE:KO), worth close to $16.93 billion, amounting to 13.1% of its total 13F portfolio. Coming in second is Yacktman Asset Management, led by Donald Yacktman, holding a $712 million position; the fund has 6.2% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Ken Fisher’s Fisher Asset Management and D E Shaw, founded by David E. Shaw.