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Hedge Fund Sentiment Is Stagnant On Edgewell Personal Care Company (EPC)

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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 second 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 6 years and analyze what the smart money thinks of Edgewell Personal Care Company (NYSE:EPC) based on that data.

Hedge fund interest in Edgewell Personal Care Company (NYSE:EPC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EPC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare EPC to other stocks including Holly Energy Partners, L.P. (NYSE:HEP), SiTime Corporation (NASDAQ:SITM), and ModivCare Inc. (NASDAQ:MODV) to get a better sense of its popularity.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Alexander Roepers of Atlantic Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to take a peek at the new hedge fund action surrounding Edgewell Personal Care Company (NYSE:EPC).

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

At second quarter's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EPC over the last 24 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in Edgewell Personal Care Company (NYSE:EPC) was held by GAMCO Investors, which reported holding $82.1 million worth of stock at the end of June. It was followed by Atlantic Investment Management with a $27.9 million position. Other investors bullish on the company included Woodline Partners, Tremblant Capital, and Clearline Capital. 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 8.78% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, designating 1.81 percent of its 13F equity portfolio to EPC.

Seeing as Edgewell Personal Care Company (NYSE:EPC) has faced declining sentiment from the smart money, it's safe to say that there were a few funds who were dropping their full holdings by the end of the second quarter. Interestingly, Brett Barakett's Tremblant Capital sold off the largest stake of the 750 funds watched by Insider Monkey, comprising about $11.9 million in stock. Brian Scudieri's fund, Kehrs Ridge Capital, also cut its stock, about $4.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's also examine hedge fund activity in other stocks similar to Edgewell Personal Care Company (NYSE:EPC). We will take a look at Holly Energy Partners, L.P. (NYSE:HEP), SiTime Corporation (NASDAQ:SITM), ModivCare Inc. (NASDAQ:MODV), EHang Holdings Limited (NASDAQ:EH), Ultra Clean Holdings Inc (NASDAQ:UCTT), Canoo Inc. (NASDAQ:GOEV), and Healthcare Services Group, Inc. (NASDAQ:HCSG). All of these stocks' market caps resemble EPC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HEP,3,4435,1 SITM,17,178627,-3 MODV,22,519901,8 EH,5,15477,1 UCTT,25,203322,8 GOEV,16,37103,0 HCSG,18,160756,-1 Average,15.1,159946,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $204 million in EPC's case. Ultra Clean Holdings Inc (NASDAQ:UCTT) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 3 bullish hedge fund positions. Edgewell Personal Care Company (NYSE:EPC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EPC is 59.9. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately EPC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EPC were disappointed as the stock returned -19.5% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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