Confluence Sells 184,995 PepsiCo Shares in Portfolio Trim

Key Points

• Confluence sold 184,995 PepsiCo shares, reducing exposure by $26.08 million.

• Transaction moved 0.37% of the fund's reported AUM.

• Post-sale PepsiCo holdings: 711,253 shares valued at $93.91 million.

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On July 1, 2025, Confluence Investment Management disclosed the sale of 184,995 shares of PepsiCo(NASDAQ:PEP), reducing its position by $26.08 million for the period ended June 30, 2025, according to SEC data.

What happened

According to a July 1, 2025 SEC filing, Confluence Investment Management sold 184,995 shares of PepsiCo, a trade valued at $26.08 million. The firm’s post-trade stake stands at 711,253 shares, representing a value of $93.91 million. This adjustment brought PepsiCo’s share of the fund’s 13F assets down from 1.70% to 1.33%.

What else to know

The sell transaction lowered PepsiCo’s portfolio weight to 1.33% of the fund's reported assets under management (AUM).

Top holdings after filing:

• SGOV: $238.64 million (3.4% of AUM)
• CB: $158.86 million (2.2% of AUM)
• SNA: $156.07 million (2.2% of AUM)
• PAYX: $151.95 million (2.1% of AUM)
• NTRS: $150.20 million (2.1% of AUM)

PepsiCo shares closed at $135.38 as of June 30, 2025, down 17.24% over one year, and underperformed the S&P 500 by 31.22 percentage points

Dividend yield: 4.21%; forward P/E: 16.98; EV/EBITDA: 13.53; 5-year revenue CAGR: 6.46% (as of June 30, 2025)

The stock trades 25.17% below its 52-week high (as of June 30, 2025)

Company overview

Company snapshot

PepsiCo offers a diverse portfolio of beverages and convenient foods, including snacks, cereals, ready-to-drink drinks, and dairy products.

The company generates revenue through manufacturing, marketing, and distributing branded food and beverage products globally, leveraging a mix of direct-store-delivery, customer warehouse, distributor networks, and e-commerce channels.

Primary customers include wholesale and retail distributors, grocery and convenience stores, mass merchandisers, foodservice operators, and e-commerce retailers worldwide.

PepsiCo operates in the consumer defensive sector with a diversified product mix and global operations. Its multi-segment business model and extensive distribution network support operations.

Foolish take

Confluence's portfolio managers reduced their PepsiCo exposure by about 20% in the second quarter of 2025. The firm still maintains a large PepsiCo position -- 1.3% exposure is a serious commitment in a portfolio with more than 450 stocks. As shown above, each of Confluence's top 5 holdings accounts for just over 2% of AUM.

The stock has struggled over the last year, amid a difficult inventory rebalancing and a shaky economy. Between low consumer confidence and a few pockets of strong inflation in Latin America and Europe, it's not easy to deliver consistent growth. PepsiCo's beverages and snack foods largely fall in the category of everyday mini-luxuries -- not the easiest sell in times like these.

Looking ahead, PepsiCo's management expects the unpredictable market conditions to continue throughout 2025. The company is taking supply chain actions to mitigate rising ingredient and packaging costs, but customer loyalty is more important than optimal profits. As a result, PepsiCo might absorb some of the tariff and currency costs instead of passing on the entire bill to consumers.

So Confluence's lower PepsiCo engagement makes sense in this tumultuous market. The firm can always rebuild this position when the financial outlook looks stronger again.

Glossary

13F AUM: Assets under management reported in quarterly SEC Form 13F filings, covering U.S.-listed equity holdings by institutional managers.

SEC filing: Official document submitted to the U.S. Securities and Exchange Commission, disclosing financial or ownership information.

Portfolio weight: The percentage of a portfolio's total value allocated to a specific investment.

Dividend yield: Annual dividends per share divided by the stock's price, shown as a percentage.

Forward P/E: Price-to-earnings ratio using forecasted earnings over the next year, indicating expected valuation.

EV/EBITDA: Enterprise value divided by earnings before interest, taxes, depreciation, and amortization; used to assess company valuation.

CAGR: Compound annual growth rate; measures the mean annual growth rate over a period, accounting for compounding.

Consumer defensive sector: Industry segment including companies producing essential goods like food, beverages, and household products, less affected by economic cycles.

Direct-store-delivery: Distribution method where manufacturers deliver products directly to retail stores, bypassing warehouses.

Mass merchandisers: Large retailers selling a wide variety of goods at low prices, such as Walmart or Target.

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Anders Bylund has positions in Walmart. The Motley Fool has positions in and recommends Paycom Software, Target, and Walmart. The Motley Fool has a disclosure policy.