Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Edgewell Personal Care Company (NYSE:EPC).
Edgewell Personal Care Company (NYSE:EPC) shareholders have witnessed a decrease in hedge fund interest of late. EPC was in 18 hedge funds' portfolios at the end of the third quarter of 2019. There were 25 hedge funds in our database with EPC holdings at the end of the previous 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 below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are numerous formulas stock market investors put to use to assess publicly traded companies. Two of the most under-the-radar formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outpace the broader indices by a solid amount (see the details here).
[caption id="attachment_25251" align="aligncenter" width="450"] George Soros of Soros Fund Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's view the latest hedge fund action surrounding Edgewell Personal Care Company (NYSE:EPC).
What have hedge funds been doing with Edgewell Personal Care Company (NYSE:EPC)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in EPC over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Edgewell Personal Care Company (NYSE:EPC) was held by GAMCO Investors, which reported holding $62.5 million worth of stock at the end of September. It was followed by Armistice Capital with a $48.7 million position. Other investors bullish on the company included Soros Fund Management, Citadel Investment Group, and Tremblant Capital. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Edgewell Personal Care Company (NYSE:EPC), around 3.23% of its 13F portfolio. Soros Fund Management is also relatively very bullish on the stock, dishing out 0.89 percent of its 13F equity portfolio to EPC.
Seeing as Edgewell Personal Care Company (NYSE:EPC) has faced a decline in interest from hedge fund managers, it's easy to see that there is a sect of money managers who sold off their positions entirely heading into Q4. Intriguingly, Steven Boyd's Armistice Capital said goodbye to the largest investment of the 750 funds watched by Insider Monkey, comprising about $41.5 million in stock, and Charles Davidson and Joseph Jacobs's Wexford Capital was right behind this move, as the fund sold off about $4.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 7 funds heading into Q4.
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. We will take a look at SPX Corporation (NYSE:SPXC), Noah Holdings Limited (NYSE:NOAH), Resideo Technologies, Inc. (NYSE:REZI), and NetScout Systems, Inc. (NASDAQ:NTCT). This group of stocks' market valuations match EPC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPXC,18,77081,2 NOAH,19,219107,7 REZI,31,340130,2 NTCT,12,100240,-2 Average,20,184140,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $184 million. That figure was $165 million in EPC's case. Resideo Technologies, Inc. (NYSE:REZI) is the most popular stock in this table. On the other hand NetScout Systems, Inc. (NASDAQ:NTCT) is the least popular one with only 12 bullish hedge fund positions. Edgewell Personal Care Company (NYSE:EPC) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EPC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EPC investors were disappointed as the stock returned -4.1% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.