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Hedge Funds Are Dumping Church & Dwight Co., Inc. (CHD)

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Church & Dwight Co., Inc. (NYSE:CHD)?

Church & Dwight Co., Inc. (NYSE:CHD) was in 27 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. CHD investors should pay attention to a decrease in enthusiasm from smart money recently. There were 38 hedge funds in our database with CHD holdings at the end of December. Our calculations also showed that CHD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma
John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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 view the recent hedge fund action regarding Church & Dwight Co., Inc. (NYSE:CHD).

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

At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. On the other hand, there were a total of 36 hedge funds with a bullish position in CHD a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CHD A Good Stock To Buy?
Is CHD A Good Stock To Buy?

Among these funds, Fundsmith LLP held the most valuable stake in Church & Dwight Co., Inc. (NYSE:CHD), which was worth $543.6 million at the end of the fourth quarter. On the second spot was Echo Street Capital Management which amassed $193.2 million worth of shares. Arrowstreet Capital, Two Sigma Advisors, and Balyasny Asset 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 Fundsmith LLP allocated the biggest weight to Church & Dwight Co., Inc. (NYSE:CHD), around 1.73% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, setting aside 1.73 percent of its 13F equity portfolio to CHD.

Due to the fact that Church & Dwight Co., Inc. (NYSE:CHD) has faced a decline in interest from the smart money, it's safe to say that there exists a select few hedge funds that elected to cut their entire stakes last quarter. Intriguingly, Ken Griffin's Citadel Investment Group sold off the biggest position of the "upper crust" of funds monitored by Insider Monkey, comprising about $32.4 million in stock, and Bryan Hinmon's Motley Fool Asset Management was right behind this move, as the fund sold off about $12.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 11 funds last quarter.

Let's now take a look at hedge fund activity in other stocks similar to Church & Dwight Co., Inc. (NYSE:CHD). We will take a look at International Paper Company (NYSE:IP), CNH Industrial NV (NYSE:CNHI), Plug Power, Inc. (NASDAQ:PLUG), XP Inc. (NASDAQ:XP), HubSpot Inc (NYSE:HUBS), Fox Corporation (NASDAQ:FOX), and Fox Corporation (NASDAQ:FOXA). This group of stocks' market caps match CHD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IP,36,259964,5 CNHI,23,739950,7 PLUG,25,612662,4 XP,23,480268,-6 HUBS,46,1738961,-6 FOX,25,774862,8 FOXA,38,865348,-1 Average,30.9,781716,1.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $782 million. That figure was $1137 million in CHD's case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 23 bullish hedge fund positions. Church & Dwight Co., Inc. (NYSE:CHD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CHD is 24. 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately CHD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CHD investors were disappointed as the stock returned -0.1% since the end of March (through 7/9) 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.