After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Clorox Company (NYSE:CLX).
The Clorox Company (NYSE:CLX) investors should be aware of an increase in activity from the world's largest hedge funds recently. CLX was in 32 hedge funds' portfolios at the end of September. There were 28 hedge funds in our database with CLX positions at the end of the previous quarter. Our calculations also showed that CLX 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_189632" align="aligncenter" width="600"] David Harding of Winton Capital 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. We're going to take a glance at the latest hedge fund action encompassing The Clorox Company (NYSE:CLX).
How are hedge funds trading The Clorox Company (NYSE:CLX)?
At Q3's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in CLX a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Cedar Rock Capital held the most valuable stake in The Clorox Company (NYSE:CLX), which was worth $416.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $181.4 million worth of shares. AQR Capital Management, Winton Capital Management, and Citadel Investment Group 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 Clorox Company (NYSE:CLX), around 9.66% of its portfolio. Cognios Capital is also relatively very bullish on the stock, earmarking 0.87 percent of its 13F equity portfolio to CLX.
As aggregate interest increased, key money managers were leading the bulls' herd. Laurion Capital Management, managed by Benjamin A. Smith, initiated the most valuable position in The Clorox Company (NYSE:CLX). Laurion Capital Management had $13.6 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $7.3 million investment in the stock during the quarter. The following funds were also among the new CLX investors: John Overdeck and David Siegel's Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Minhua Zhang's Weld Capital Management.
Let's also examine hedge fund activity in other stocks similar to The Clorox Company (NYSE:CLX). These stocks are Cincinnati Financial Corporation (NASDAQ:CINF), CGI Inc. (NYSE:GIB), Liberty Broadband Corp (NASDAQ:LBRDK), and Liberty Broadband Corp (NASDAQ:LBRDA). All of these stocks' market caps match CLX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CINF,23,565077,5 GIB,14,300448,0 LBRDK,40,3494094,0 LBRDA,21,694238,1 Average,24.5,1263464,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $1263 million. That figure was $1005 million in CLX's case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 14 bullish hedge fund positions. The Clorox Company (NYSE:CLX) 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 CLX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CLX were disappointed as the stock returned -1.7% 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.