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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Stanley Black & Decker, Inc. (NYSE:SWK).
Stanley Black & Decker, Inc. (NYSE:SWK) shareholders have witnessed an increase in hedge fund interest in recent months. Stanley Black & Decker, Inc. (NYSE:SWK) was in 44 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SWK isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Daniel Och, Founder of OZ Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Keeping this in mind we're going to take a look at the key hedge fund action regarding Stanley Black & Decker, Inc. (NYSE:SWK).
Do Hedge Funds Think SWK Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 33 hedge funds with a bullish position in SWK a year ago. 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 Stanley Black & Decker, Inc. (NYSE:SWK) was held by Pzena Investment Management, which reported holding $211.6 million worth of stock at the end of June. It was followed by D E Shaw with a $127.4 million position. Other investors bullish on the company included Holocene Advisors, GLG Partners, and OZ Management. In terms of the portfolio weights assigned to each position Columbus Point allocated the biggest weight to Stanley Black & Decker, Inc. (NYSE:SWK), around 5.22% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, setting aside 0.82 percent of its 13F equity portfolio to SWK.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Weiss Asset Management, managed by Andrew Weiss, assembled the most outsized position in Stanley Black & Decker, Inc. (NYSE:SWK). Weiss Asset Management had $21.3 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $21.3 million investment in the stock during the quarter. The following funds were also among the new SWK investors: Franklin Parlamis's Aequim Alternative Investments, Rob Cope's Columbus Point, and Paul Tudor Jones's Tudor Investment Corp.
Let's now review hedge fund activity in other stocks similar to Stanley Black & Decker, Inc. (NYSE:SWK). We will take a look at First Republic Bank (NYSE:FRC), Wayfair Inc (NYSE:W), Cloudflare, Inc. (NYSE:NET), Liberty Broadband Corp (NASDAQ:LBRDK), STMicroelectronics N.V. (NYSE:STM), CoStar Group Inc (NASDAQ:CSGP), and Corteva, Inc. (NYSE:CTVA). This group of stocks' market valuations are closest to SWK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRC,34,1226197,-7 W,35,3902769,-2 NET,43,862578,-2 LBRDK,63,7386186,-7 STM,13,159058,-2 CSGP,49,2816593,6 CTVA,34,1283913,-1 Average,38.7,2519613,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.7 hedge funds with bullish positions and the average amount invested in these stocks was $2520 million. That figure was $988 million in SWK's case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand STMicroelectronics N.V. (NYSE:STM) is the least popular one with only 13 bullish hedge fund positions. Stanley Black & Decker, Inc. (NYSE:SWK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SWK is 71. 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 positive signal but 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 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately SWK wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SWK were disappointed as the stock returned -14.3% since the end of June (through 10/1) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.