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Did Hedge Funds Drop The Ball On Kimberly Clark Corporation (KMB) ?

Reymerlyn Martin

Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Kimberly Clark Corporation (NYSE:KMB) investors should pay attention to a decrease in activity from the world's largest hedge funds of late. Our calculations also showed that KMB isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

BlueMountain Capital Management's Returns, AUM and Holdings

Let's take a gander at the key hedge fund action surrounding Kimberly Clark Corporation (NYSE:KMB).

What does the smart money think about Kimberly Clark Corporation (NYSE:KMB)?

At Q1's end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in KMB over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

KMB_jun2019

The largest stake in Kimberly Clark Corporation (NYSE:KMB) was held by Diamond Hill Capital, which reported holding $190.7 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $173.6 million position. Other investors bullish on the company included Alkeon Capital Management, AQR Capital Management, and Millennium Management.

Due to the fact that Kimberly Clark Corporation (NYSE:KMB) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few money managers who sold off their positions entirely last quarter. Interestingly, Clint Carlson's Carlson Capital said goodbye to the biggest position of the "upper crust" of funds tracked by Insider Monkey, worth close to $25.7 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dumped about $7.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Kimberly Clark Corporation (NYSE:KMB) but similarly valued. We will take a look at Marriott International Inc (NYSE:MAR), Dell Technologies Inc. (NYSE:DELL), The Progressive Corporation (NYSE:PGR), and Emerson Electric Co. (NYSE:EMR). This group of stocks' market caps are closest to KMB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAR,25,2046505,-7 DELL,37,1816635,-6 PGR,44,1917725,-4 EMR,44,961297,10 Average,37.5,1685541,-1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $1686 million. That figure was $860 million in KMB's case. The Progressive Corporation (NYSE:PGR) is the most popular stock in this table. On the other hand Marriott International Inc (NYSE:MAR) is the least popular one with only 25 bullish hedge fund positions. Kimberly Clark Corporation (NYSE:KMB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on KMB as the stock returned 5.1% during the same time frame and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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