Is Mondelez International A Buy After Pershing Square’s Holding Increase?

Mondelez International Inc. (NASDAQ:MDLZ) appears to have lost its spark on Wall Street after plummeting from highs of $47 a share to current trading levels. However, the stock finding support at the $40.50 a share mark is already fuelling speculation that it could be an exciting pick.

Mondelez Institutional Holding

Pershing Square Capital Management increasing its stake in the food company continues to strengthen the case of why Mondelez International Inc. (NASDAQ:MDLZ) is a buy at the $40 a share mark. The hedge fund owns 84.6 million shares, up from $14.5 million shares held as of the end of the second quarter. The holding represents a 5.6% stake in the company.

Pershing Square stake in Mondelez accounts for 29.15% of its total holdings. The firm also owns 36.80 million shares of Automatic Data Processing which represents 33.65% of its total equity portfolio. Vanguard is the largest shareholder in Mondelez with a holding worth 98.80 million shares. BlackRock comes a close second with a holding of 89.24 million shares.

Mondelez Headwinds

The holdings by the three hedge funds all but makes the case as to why Mondlez is still a buy even after coming under pressure in recent months. However, equity firms have started to question the company’s valuation given the challenges it continues to face.

The Street’s Quant Rating service has downgraded the stock on concerns that indicators point to a further drop. The firm maintains a share price target of between $38 and $36 a share, should the stock close below the $40.18 mark.

Fuelling concerns about a further drop is the fact that Mondelez business has failed to inspire investors in the recent past. Sales developments have disappointed as the company remains under pressure within the retail landscape.

Amazon.com, Inc. (NASDAQ:AMZN) expanding its operations in the food business with the acquisition of Whole Foods is another headwind that continues to raise concerns about Mondelez long term prospects. Uncertainty about a new CEO who is set to take over from Irene Rosenfeld is another headwind that should continue to affect investor’s sentiments on the food company.