"The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak," are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Church & Dwight Co., Inc. (NYSE:CHD) and see how it was affected. There is only one ETF with at least 5% weight in CHD right now: Invesco DWA Consumer Staples Momentum ETF (NASDAQ:PSL).
Is Church & Dwight Co., Inc. (NYSE:CHD) the right pick for your portfolio? Investors who are in the know are getting more bullish. The number of long hedge fund bets moved up by 4 recently. Our calculations also showed that CHD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CHD was in 34 hedge funds' portfolios at the end of the third quarter of 2019. There were 30 hedge funds in our database with CHD holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most traders, hedge funds are perceived as worthless, old financial vehicles of years past. While there are over 8000 funds with their doors open today, Our researchers look at the crème de la crème of this group, around 750 funds. Most estimates calculate that this group of people have their hands on most of the smart money's total capital, and by observing their first-class stock picks, Insider Monkey has brought to light a few investment strategies that have historically exceeded 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 per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_25717" align="aligncenter" width="548"] Steven Cohen of Point72 Asset Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the key hedge fund action surrounding Church & Dwight Co., Inc. (NYSE:CHD).
Hedge fund activity in Church & Dwight Co., Inc. (NYSE:CHD)
Heading into the fourth quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CHD over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Church & Dwight Co., Inc. (NYSE:CHD), with a stake worth $67.5 million reported as of the end of September. Trailing AQR Capital Management was Citadel Investment Group, which amassed a stake valued at $66.6 million. Echo Street Capital Management, Renaissance Technologies, and Point72 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 Axel Capital Management allocated the biggest weight to Church & Dwight Co., Inc. (NYSE:CHD), around 1.86% of its portfolio. Prospector Partners is also relatively very bullish on the stock, designating 1.67 percent of its 13F equity portfolio to CHD.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in Church & Dwight Co., Inc. (NYSE:CHD). Citadel Investment Group had $66.6 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $45.5 million position during the quarter. The following funds were also among the new CHD investors: Thomas Bailard's Bailard Inc, David Andre and Astro Teller's Cerebellum Capital, and Roy Vermus and Shlomi Bracha's Noked Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Church & Dwight Co., Inc. (NYSE:CHD) but similarly valued. These stocks are Altice USA, Inc. (NYSE:ATUS), Cadence Design Systems Inc (NASDAQ:CDNS), Fortis Inc. (NYSE:FTS), and MSCI Inc (NYSE:MSCI). This group of stocks' market valuations resemble CHD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATUS,51,3138068,6 CDNS,33,1579724,5 FTS,13,561241,1 MSCI,37,643687,1 Average,33.5,1480680,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $1481 million. That figure was $544 million in CHD's case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 13 bullish hedge fund positions. Church & Dwight Co., Inc. (NYSE:CHD) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 CHD wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CHD were disappointed as the stock returned -6.3% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
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