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Is EPC A Good Stock To Buy Now According To Hedge Funds?

Abigail Fisher
·6 min read

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Edgewell Personal Care Company (NYSE:EPC) based on that data.

Is EPC a good stock to buy now? Edgewell Personal Care Company (NYSE:EPC) was in 21 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 37. EPC shareholders have witnessed an increase in enthusiasm from smart money lately. There were 20 hedge funds in our database with EPC positions at the end of the second quarter. Our calculations also showed that EPC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Alexander Roepers of Atlantic Investment Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we're going to take a peek at the fresh hedge fund action regarding Edgewell Personal Care Company (NYSE:EPC).

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

At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EPC over the last 21 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Among these funds, GAMCO Investors held the most valuable stake in Edgewell Personal Care Company (NYSE:EPC), which was worth $56.1 million at the end of the third quarter. On the second spot was Armistice Capital which amassed $30.1 million worth of shares. Atlantic Investment Management, Arrowstreet Capital, and AQR Capital Management 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 Atlantic Investment Management allocated the biggest weight to Edgewell Personal Care Company (NYSE:EPC), around 10.44% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, earmarking 2.14 percent of its 13F equity portfolio to EPC.

As aggregate interest increased, key money managers have jumped into Edgewell Personal Care Company (NYSE:EPC) headfirst. Renaissance Technologies, assembled the largest position in Edgewell Personal Care Company (NYSE:EPC). Renaissance Technologies had $4.4 million invested in the company at the end of the quarter. Mark Coe's Intrinsic Edge Capital also initiated a $4.3 million position during the quarter. The only other fund with a new position in the stock is Jinghua Yan's TwinBeech Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Edgewell Personal Care Company (NYSE:EPC) but similarly valued. These stocks are Meritor Inc (NYSE:MTOR), Heartland Express, Inc. (NASDAQ:HTLD), Fulton Financial Corp (NASDAQ:FULT), NMI Holdings Inc (NASDAQ:NMIH), Simulations Plus, Inc. (NASDAQ:SLP), Azul S.A. (NYSE:AZUL), and SkyWest, Inc. (NASDAQ:SKYW). This group of stocks' market values resemble EPC's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTOR,17,192344,-1 HTLD,15,57175,2 FULT,15,36348,0 NMIH,19,195944,-11 SLP,10,41800,1 AZUL,10,59994,-3 SKYW,19,68825,3 Average,15,93204,-1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $188 million in EPC's case. NMI Holdings Inc (NASDAQ:NMIH) is the most popular stock in this table. On the other hand Simulations Plus, Inc. (NASDAQ:SLP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Edgewell Personal Care Company (NYSE:EPC) is more popular among hedge funds. Our overall hedge fund sentiment score for EPC is 73. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on EPC as the stock returned 30.2% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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