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With any equity, there are generally five large groups of stakeholders - insiders, institutions, option traders, short sellers, analysts and individual investors. While it is hard to track trends among individual investors, we can track the moves and sentiment of the other five stakeholders. Using this as a framework, let's compare the three major public soda companies - Coke (KO), Pepsi (PEP) and Dr. Pepper Snapple (DPS).

For each company, we will look at how each group of stakeholders is voting with their money. Headlines can be powerful movers of an equity, but it is important to watch how investors actually vote with their money - sometimes the public 'talk' and the private 'walk' are different.

The Coca-Cola Company

Insiders - Neutral

Insiders currently hold 225 million shares of the total 4.49 billion shares outstanding, 5% of the outstanding shares. Their stock acquisition activity has been a slight net negative over both the last 3 months and last 12 months. In the last three months, the net sales were 379,000 shares and 1.8 million over the last year, or less than 1% of insider holdings. This could be simply natural stock option exercises and so this is probably a neutral sentiment.

Institutions - Neutral

There are 1,517 institutional holders controlling 2.764 billion shares, or 62% of the outstanding shares. The institutions have net reduced positions by 77 million shares, or roughly 2.8% of their ownership and 1.8% of the total shares. The net activity was:

  • 87 opened new positions
  • 605 increased
  • 731 reduced
  • 47 sold out
  • 191 no change

This activity is a generally neutral to slightly positive.

Short Sellers - Bullish

Open short interest was 27 million shares as of November 30th, or just 0.6% of the outstanding shares. This is down about 33% over the last year and down 40% from the peak this year in July. The open short interest is such a small part of the overall share base that activity here would not immediately have an impact. The reduced positions could be generally considered a positive move, or one in favor of the bulls.

Options - Bullish

Scanning the open contracts, we can generally get a feel for which way the options traders are voting on this stock. Here are the five largest open option contract positions.

  • Jan 2014 $37.50 puts - 92,017 contracts
  • Jan 2014 $25.00 puts - 87,895 contracts
  • Jan 2013 $33.75 puts - 77,208 contracts
  • Jan 2013 $32.50 puts - 56,410 contracts
  • Jan 2013 $37.59 calls - 55,421 contracts

With options, it can sometimes be hard to read the message because the strategies employed vary widely. For example, the largest open position on Coke are the Jan 2014 $37.50 put LEAPs. Someone could be playing this as a bull expecting the price to be above the strike price in a year, in which case they will have earned at least 9% (assuming these are cash secured puts). The buyers of these puts could be buying downside protection while volatility was low. And of course there are any number of spread strategies that might be leveraging the time and strike price.

So, how should we read this one? Hard to say. Four of the five largest positions could be bullish moves from the sellers. The Jan 2014 $25 LEAP position is probably a bearish bet because a 1% premium for one year of holding does not make sense. So, I would generally look at this option line-up as bullish.

Analysts - Bullish

Three months ago, there were 6 strong buy, 6 buy, 5 hold and 1 underperform rating. The most recent reporting has 6 strong buy, 6 buy, 6 at hold and 1 underperform rating. This is overall very bullish and the stability over the last three months is also a positive sign.

Price Target

Coke's 52 week trading range is $33.28 - $40.67 and is currently trading around $36.90. Coke pays a 2.8% dividend with a 52% payout ratio. Analysts have an average $42.38 price target, or a 15% upside potential from recent trading.

PepsiCo

Insiders - Bearish

Insiders currently hold 2 million shares of the total 1.55 billion shares outstanding, or 0.1% of the outstanding shares - an extremely low insider ownership position. Their stock activity has been a slight net negative over the last 3 months and noticeably negative over the last 12 months. In the last three months, the net sales were 60,000 shares and 700,000 million over the last year. The 700,000 represents a 26% reduction in their holdings - a large percentage. This is a clear bearish sign both in terms of sale activity and in terms of low insider ownership.

Institutions - Bearish

There are 1,560 institutional holders controlling 1.059 billion shares, or 68% of the outstanding shares. The institutions have net reduced positions by 6.5 million shares, or roughly 0.6% of their ownership and 0.4% of the total shares. The net activity was:

  • 66 opened new positions
  • 566 increased
  • 819 reduced
  • 73 sold out
  • 175 no change

The reduced positions outnumber the increased positions by 1.4 to 1. While the overall share action is roughly neutral, the ratio of moves is bearish so we will call this one a bear signal.

Short Sellers - Bullish

Open short interest was 11.6 million shares as of November 30th, or just 0.7% of the outstanding shares. This is up about 30% over the last year and down 32% from the peak this year in August. There are mixed messages in the short positions. Given that more recent activity generally deserves most weight and given the most recent action is positive so we will call this one in favor of the bulls.

Options - Bullish

Here are the five largest open positions.

  • Jan 2013 $72.50 calls - 28,287 contracts
  • Jan 2013 $70.00 calls - 21,219 contracts
  • Jan 2013 $67.59 puts - 14,973 contracts
  • Jan 2014 $70.00 calls - 13,849 contracts
  • Jan 2103 $75.00 calls - 13,263 contracts

Given the high level of near the money calls here, we will consider this one bullish.

Analysts - Bullish

Three months ago, there were 3 strong buy, 8 buy and 7 hold ratings. The most recent reporting has exactly the same. This is skewed very bullish and the stability over the last three months is also a positive sign.

Price Target

Pepsi's 52 week trading range is $62.15 - $73.66 and is currently trading around $69.60. Pepsi pays a 3.1% dividend with a 56% payout ratio. Analysts have an average $76.54 price target, or a 10% upside potential from recent trading.

Dr. Pepper Snapple

Insiders - Bearish

Insiders currently hold 589,000 shares of the total 209 million shares outstanding, or 0.2% of the outstanding shares - an extremely low insider ownership position. Their stock activity has been negative over the last 3 months and noticeably negative over the last 12 months. In the last three months, the net sales were 48,000 shares and 392,000 over the last year. The 392,000 represents a 40% reduction in their holdings - a very large percentage. This is a clear bearish sign both in terms of sale activity and in terms of low insider ownership.

Institutions - Neutral

There are 445 institutional holders controlling 203 million shares, or 97.6% of the outstanding shares - this does not leave much room for the individual investor. The institutions have net added to their positions by 900,000 shares. The net activity was:

  • 48 opened new positions
  • 196 increased
  • 187 reduced
  • 36 sold out
  • 62 no change

The increased positions outnumber the increased positions by 1.1 to 1. Generally this is a neutral signal. Again for individual investors there is only 2.5$ of the outstanding float available to trade so if any major shift happens, it could be dramatic.

Short Sellers - Bearish

Open short interest was 11.6 million shares as of November 30th, or 5.5% of the outstanding shares. This is up about 147% over the last year and near the highs over the last 12 months. This is clearly bearish action. Be careful.

Options - Neutral

There is very little in the options market for Dr. Pepper. The largest open position is just 612 contracts of Feb 2013 $45 calls. Given the light activity here, we'll call this one neutral.

Analysts - Bullish

Three months ago, there were 3 strong buy, 2 buy and 8 hold and 2 sell ratings. The most recent reporting has exactly the same. This is skewed neutral. The stability over the last three months is a positive sign so we will consider this a slightly bullish stance.

Price Target

Dr. Pepper's 52 week trading range is $36.51 - $46.06 and is currently trading around $44.70. Dr. Pepper pays a 3.0% dividend with a 47% payout ratio. Analysts have an average $47.10 price target, or a 5% upside potential from recent trading.

Conclusion

So, summarizing the major stakeholders activity on our three stocks:

Coke

Pepsi

Dr. Pepper

Insiders

Neutral

Bearish

Bearish

Institutions

Neutral

Bearish

Neutral

Shorts

Bullish

Bullish

Bearish

Options

Bullish

Bullish

Neutral

Analysts

Bullish

Bullish

Bullish

Dividend

2.8%

3.1%

3.0%

Price Potential Upside

15%

10%

5%

Overall, reviewing these three stocks with the tools presented here, Coke comes out ahead in terms of how the major stakeholders are voting with their money.

Source: Which Soda Company Could Put Some Pop In Your Portfolio?

Additional disclosure: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is only my opinion based on personal research and offered for informational purposes. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any equity, do your own research and reach your own conclusion. Investing includes risks, including loss of principal.