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Hedge Funds Are Cashing Out Of The Procter & Gamble Company (PG)

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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded The Procter & Gamble Company (NYSE:PG) based on those filings.

The Procter & Gamble Company (NYSE:PG) was in 70 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 83. PG has experienced a decrease in hedge fund interest in recent months. There were 83 hedge funds in our database with PG positions at the end of the fourth quarter. Our calculations also showed that PG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are several tools market participants put to use to value stocks. A duo of the most underrated tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the market by a very impressive margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

TRIAN PARTNERS
TRIAN PARTNERS

Nelson Peltz of Trian Partners

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 let's go over the latest hedge fund action encompassing The Procter & Gamble Company (NYSE:PG).

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

At Q1's end, a total of 70 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PG over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Trian Partners was the largest shareholder of The Procter & Gamble Company (NYSE:PG), with a stake worth $1203.3 million reported as of the end of March. Trailing Trian Partners was Cedar Rock Capital, which amassed a stake valued at $1179.2 million. Arrowstreet Capital, GQG Partners, 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 Cedar Rock Capital allocated the biggest weight to The Procter & Gamble Company (NYSE:PG), around 26.35% of its 13F portfolio. Trian Partners is also relatively very bullish on the stock, setting aside 14.23 percent of its 13F equity portfolio to PG.

Judging by the fact that The Procter & Gamble Company (NYSE:PG) has witnessed a decline in interest from the aggregate hedge fund industry, it's safe to say that there exists a select few funds who sold off their entire stakes in the first quarter. Intriguingly, Doug Silverman and Alexander Klabin's Senator Investment Group cut the largest position of the "upper crust" of funds monitored by Insider Monkey, totaling an estimated $84.2 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also said goodbye to its stock, about $58.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 13 funds in the first quarter.

Let's now take a look at hedge fund activity in other stocks similar to The Procter & Gamble Company (NYSE:PG). These stocks are NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), Paypal Holdings Inc (NASDAQ:PYPL), Intel Corporation (NASDAQ:INTC), ASML Holding N.V. (NASDAQ:ASML), Comcast Corporation (NASDAQ:CMCSA), and Verizon Communications Inc. (NYSE:VZ). This group of stocks' market caps are closest to PG's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVDA,80,6204940,-8 HD,68,4359872,-11 PYPL,143,14717163,-4 INTC,83,7616792,11 ASML,35,3827143,5 CMCSA,88,9762151,4 VZ,69,11383576,2 Average,80.9,8267377,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 80.9 hedge funds with bullish positions and the average amount invested in these stocks was $8267 million. That figure was $8539 million in PG's case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand ASML Holding N.V. (NASDAQ:ASML) is the least popular one with only 35 bullish hedge fund positions. The Procter & Gamble Company (NYSE:PG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PG is 33.5. 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 negative signal and 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately PG wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PG investors were disappointed as the stock returned 0.2% since the end of March (through 6/11) 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 most of these stocks already outperformed the market in 2021.

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

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