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After several tireless days we have finished crunching the numbers from nearly 900 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 March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Kimberly Clark Corporation (NYSE:KMB).
Kimberly Clark Corporation (NYSE:KMB) investors should pay attention to a decrease in support from the world's most elite money managers of late. Kimberly Clark Corporation (NYSE:KMB) was in 31 hedge funds' portfolios at the end of March. The all time high for this statistic is 46. Our calculations also showed that KMB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Ray Dalio of Bridgewater Associates
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. With all of this in mind we're going to check out the new hedge fund action surrounding Kimberly Clark Corporation (NYSE:KMB).
Do Hedge Funds Think KMB Is A Good Stock To Buy Now?
At the end of March, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KMB over the last 23 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Kimberly Clark Corporation (NYSE:KMB) was held by Diamond Hill Capital, which reported holding $357.1 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $345.1 million position. Other investors bullish on the company included Two Sigma Advisors, AQR Capital Management, and Bridgewater Associates. In terms of the portfolio weights assigned to each position Diamond Hill Capital allocated the biggest weight to Kimberly Clark Corporation (NYSE:KMB), around 1.44% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 1.17 percent of its 13F equity portfolio to KMB.
Seeing as Kimberly Clark Corporation (NYSE:KMB) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of money managers that elected to cut their positions entirely last quarter. At the top of the heap, Phill Gross and Robert Atchinson's Adage Capital Management dumped the biggest stake of all the hedgies followed by Insider Monkey, valued at about $57.1 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund said goodbye to about $3.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 6 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Kimberly Clark Corporation (NYSE:KMB) but similarly valued. We will take a look at Pinterest, Inc. (NYSE:PINS), Las Vegas Sands Corp. (NYSE:LVS), Rocket Companies, Inc. (NYSE:RKT), Carvana Co. (NYSE:CVNA), America Movil SAB de CV (NYSE:AMX), TC Energy Corporation (NYSE:TRP), and Barclays PLC (NYSE:BCS). This group of stocks' market valuations are closest to KMB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PINS,83,4189031,-12 LVS,62,2441021,-1 RKT,21,208014,5 CVNA,64,7536279,1 AMX,15,93823,-1 TRP,25,429089,6 BCS,10,79712,-2 Average,40,2139567,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $2140 million. That figure was $1287 million in KMB's case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand Barclays PLC (NYSE:BCS) is the least popular one with only 10 bullish hedge fund positions. Kimberly Clark Corporation (NYSE:KMB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KMB is 33.6. 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 negative signal and 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately KMB wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KMB investors were disappointed as the stock returned -2.5% since the end of March (through 7/2) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.