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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. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Lowe's Companies, Inc. (NYSE:LOW) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Lowe's Companies (LOW) stock a buy or sell? The best stock pickers were in a bearish mood. The number of bullish hedge fund bets retreated by 12 lately. Lowe's Companies, Inc. (NYSE:LOW) was in 71 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 89. Our calculations also showed that LOW isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 83 hedge funds in our database with LOW positions at the end of the third quarter.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best hydrogen fuel cell 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 (or at the end of this article). Now let's take a peek at the key hedge fund action regarding Lowe's Companies, Inc. (NYSE:LOW).
Do Hedge Funds Think LOW Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 71 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the third quarter of 2020. By comparison, 77 hedge funds held shares or bullish call options in LOW 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 Lowe's Companies, Inc. (NYSE:LOW) was held by Pershing Square, which reported holding $1988.3 million worth of stock at the end of December. It was followed by D E Shaw with a $536.1 million position. Other investors bullish on the company included Soroban Capital Partners, Two Sigma Advisors, and AQR Capital Management. In terms of the portfolio weights assigned to each position Pershing Square allocated the biggest weight to Lowe's Companies, Inc. (NYSE:LOW), around 19.88% of its 13F portfolio. Two Creeks Capital Management is also relatively very bullish on the stock, designating 8.04 percent of its 13F equity portfolio to LOW.
Because Lowe's Companies, Inc. (NYSE:LOW) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few funds that elected to cut their positions entirely in the fourth quarter. At the top of the heap, Gabriel Plotkin's Melvin Capital Management dropped the biggest stake of the 750 funds watched by Insider Monkey, comprising close to $215.6 million in stock. Ken Griffin's fund, Citadel Investment Group, also sold off its stock, about $208.8 million worth. These moves are interesting, as aggregate hedge fund interest fell by 12 funds in the fourth quarter.
Let's also examine hedge fund activity in other stocks similar to Lowe's Companies, Inc. (NYSE:LOW). We will take a look at China Mobile Limited (NYSE:CHL), Royal Bank of Canada (NYSE:RY), International Business Machines Corp. (NYSE:IBM), Advanced Micro Devices, Inc. (NASDAQ:AMD), TOTAL S.A. (NYSE:TOT), BlackRock, Inc. (NYSE:BLK), and Raytheon Technologies Corp (NYSE:RTX). All of these stocks' market caps resemble LOW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHL,13,275668,3 RY,18,177204,2 IBM,51,998446,11 AMD,74,6688629,3 TOT,14,980330,-4 BLK,53,1155646,14 RTX,59,2728602,4 Average,40.3,1857789,4.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.3 hedge funds with bullish positions and the average amount invested in these stocks was $1858 million. That figure was $5192 million in LOW's case. Advanced Micro Devices, Inc. (NASDAQ:AMD) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 13 bullish hedge fund positions. Lowe's Companies, Inc. (NYSE:LOW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LOW is 64.5. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on LOW as the stock returned 7.3% since the end of Q4 (through 3/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.