Monster Beverage Corp (MNST)

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Was The Smart Money Right About Monster Beverage Corp (MNST)?
By: Debasis Saha | May 10, 2021

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 Monster Beverage Corp (NASDAQ:MNST) in this article.

Monster Beverage Corp (NASDAQ:MNST) was in 44 hedge funds' portfolios at the end of December. The all time high for this statistic is 50. MNST has seen a decrease in hedge fund sentiment of late. There were 50 hedge funds in our database with MNST positions at the end of the third quarter. Our calculations also showed that MNST isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Do Hedge Funds Think MNST Is A Good Stock To Buy Now?

At Q4's end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MNST over the last 22 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Monster Beverage Corp (NASDAQ:MNST), which was worth $946 million at the end of the fourth quarter. On the second spot was Broadwood Capital which amassed $430.6 million worth of shares. AQR Capital Management, D E Shaw, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Broadwood Capital allocated the biggest weight to Monster Beverage Corp (NASDAQ:MNST), around 25.55% of its 13F portfolio. Lakehouse Capital is also relatively very bullish on the stock, designating 9.49 percent of its 13F equity portfolio to MNST.

Because Monster Beverage Corp (NASDAQ:MNST) has witnessed bearish sentiment from hedge fund managers, it's safe to say that there exists a select few fund managers that decided to sell off their entire stakes heading into Q1. Intriguingly, Jeff Lignelli's Incline Global Management dumped the biggest position of the 750 funds followed by Insider Monkey, totaling close to $19.6 million in stock, and Robert Pitts's Steadfast Capital Management was right behind this move, as the fund dumped about $11 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds heading into Q1.

Let's go over hedge fund activity in other stocks similar to Monster Beverage Corp (NASDAQ:MNST). We will take a look at Honda Motor Co Ltd (NYSE:HMC), America Movil SAB de CV (NYSE:AMX), Aon plc (NYSE:AON), Prudential Public Limited Company (NYSE:PUK), Emerson Electric Co. (NYSE:EMR), Ambev SA (NYSE:ABEV), and Newmont Corporation (NYSE:NEM). This group of stocks' market caps are similar to MNST's market cap.

As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $1276 million. That figure was $2837 million in MNST's case. Aon plc (NYSE:AON) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 2 bullish hedge fund positions. Monster Beverage Corp (NASDAQ:MNST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MNST is 59.8. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately MNST wasn't nearly as popular as these 10 stocks and hedge funds that were betting on MNST were disappointed as the stock returned 4.9% since the end of December (through 4/30) and underperformed the market.

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