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Do Hedge Funds Love Stanley Black & Decker, Inc. (SWK)?

Abigail Fisher
·6 min read

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 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Stanley Black & Decker, Inc. (NYSE:SWK).

Is Stanley Black & Decker, Inc. (NYSE:SWK) a healthy stock for your portfolio? Investors who are in the know are taking a bearish view. The number of long hedge fund positions decreased by 5 recently. Our calculations also showed that SWK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). SWK was in 36 hedge funds' portfolios at the end of the first quarter of 2020. There were 41 hedge funds in our database with SWK holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.

If you'd ask most investors, hedge funds are perceived as underperforming, outdated investment tools of yesteryear. While there are more than 8000 funds in operation at present, Our researchers choose to focus on the bigwigs of this group, about 850 funds. These hedge fund managers administer bulk of the smart money's total asset base, and by monitoring their first-class equity investments, Insider Monkey has revealed many investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

[caption id="attachment_735536" align="aligncenter" width="399"] Sander Gerber of Hudson Bay Capital Management[/caption]

Sander Gerber Hudson Bay Capital Management
Sander Gerber Hudson Bay Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's review the fresh hedge fund action surrounding Stanley Black & Decker, Inc. (NYSE:SWK).

How have hedgies been trading Stanley Black & Decker, Inc. (NYSE:SWK)?

Heading into the second quarter of 2020, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SWK over the last 18 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.

Among these funds, Pzena Investment Management held the most valuable stake in Stanley Black & Decker, Inc. (NYSE:SWK), which was worth $271.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $246.6 million worth of shares. Marshall Wace LLP, Ariel Investments, and Two Sigma Advisors 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 Albar Capital allocated the biggest weight to Stanley Black & Decker, Inc. (NYSE:SWK), around 4.81% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, designating 2.05 percent of its 13F equity portfolio to SWK.

Seeing as Stanley Black & Decker, Inc. (NYSE:SWK) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain "tier" of funds that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Robert Pohly's Samlyn Capital said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, comprising close to $27.3 million in stock, and Gregg Moskowitz's Interval Partners was right behind this move, as the fund said goodbye to about $23.4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 5 funds by the end of the third quarter.

Let's also examine hedge fund activity in other stocks similar to Stanley Black & Decker, Inc. (NYSE:SWK). We will take a look at Marathon Petroleum Corp (NYSE:MPC), Check Point Software Technologies Ltd. (NASDAQ:CHKP), IAC/InterActiveCorp (NASDAQ:IAC), and Skyworks Solutions Inc (NASDAQ:SWKS). This group of stocks' market valuations resemble SWK's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MPC,57,996652,-12 CHKP,29,599085,-1 IAC,57,2692755,-14 SWKS,29,768807,-14 Average,43,1264325,-10.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $1264 million. That figure was $908 million in SWK's case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Check Point Software Technologies Ltd. (NASDAQ:CHKP) is the least popular one with only 29 bullish hedge fund positions. Stanley Black & Decker, Inc. (NYSE:SWK) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on SWK as the stock returned 25.4% during the second quarter and outperformed the market by an even larger margin.

[company-follow-email id=93556][/company-follow-email]

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

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