Were Hedge Funds Right About Anheuser-Busch InBev SA/NV (BUD)?
Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Anheuser-Busch InBev SA/NV (NYSE:BUD) in this article.
Anheuser-Busch InBev SA/NV (NYSE:BUD) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds' portfolios at the end of March. Our calculations also showed that BUD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare BUD to other stocks including Rio Tinto Group (NYSE:RIO), Sanofi (NYSE:SNY), and The Charles Schwab Corporation (NYSE:SCHW) to get a better sense of its popularity.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Daniel Och, Founder of OZ Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to check out the fresh hedge fund action encompassing Anheuser-Busch InBev SA/NV (NYSE:BUD).
Do Hedge Funds Think BUD Is A Good Stock To Buy Now?
At first quarter's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in BUD a year ago. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Anheuser-Busch InBev SA/NV (NYSE:BUD) was held by Fisher Asset Management, which reported holding $509.3 million worth of stock at the end of December. It was followed by Gardner Russo & Gardner with a $348.8 million position. Other investors bullish on the company included Armistice Capital, Citadel Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Gardner Russo & Gardner allocated the biggest weight to Anheuser-Busch InBev SA/NV (NYSE:BUD), around 3.18% of its 13F portfolio. Beddow Capital Management is also relatively very bullish on the stock, designating 1.52 percent of its 13F equity portfolio to BUD.
Because Anheuser-Busch InBev SA/NV (NYSE:BUD) has faced a decline in interest from the smart money, we can see that there lies a certain "tier" of hedgies that elected to cut their full holdings by the end of the first quarter. Interestingly, Daniel S. Och's OZ Management dumped the biggest position of all the hedgies monitored by Insider Monkey, worth an estimated $252.6 million in stock, and Charles Davidson and Joseph Jacobs's Wexford Capital was right behind this move, as the fund cut about $2.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Anheuser-Busch InBev SA/NV (NYSE:BUD) but similarly valued. These stocks are Rio Tinto Group (NYSE:RIO), Sanofi (NYSE:SNY), The Charles Schwab Corporation (NYSE:SCHW), Applied Materials, Inc. (NASDAQ:AMAT), TOTAL S.A. (NYSE:TOT), International Business Machines Corp. (NYSE:IBM), and HSBC Holdings plc (NYSE:HSBC). This group of stocks' market caps are similar to BUD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RIO,25,1596509,-1 SNY,15,1142178,0 SCHW,76,4905041,15 AMAT,78,5711193,17 TOT,17,1163601,3 IBM,41,1355701,-10 HSBC,12,234093,-2 Average,37.7,2301188,3.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.7 hedge funds with bullish positions and the average amount invested in these stocks was $2301 million. That figure was $980 million in BUD's case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 12 bullish hedge fund positions. Anheuser-Busch InBev SA/NV (NYSE:BUD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BUD is 20.6. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately BUD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BUD investors were disappointed as the stock returned 9.4% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
