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The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Newell Brands Inc. (NASDAQ:NWL).
Is NWL stock a buy? Hedge funds were getting less optimistic. The number of bullish hedge fund bets retreated by 4 lately. Newell Brands Inc. (NASDAQ:NWL) was in 23 hedge funds' portfolios at the end of December. The all time high for this statistic is 51. Our calculations also showed that NWL isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 27 hedge funds in our database with NWL holdings at the end of September.
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 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 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.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's review the recent hedge fund action surrounding Newell Brands Inc. (NASDAQ:NWL).
Do Hedge Funds Think NWL Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NWL over the last 22 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Newell Brands Inc. (NASDAQ:NWL) was held by Icahn Capital LP, which reported holding $927.8 million worth of stock at the end of December. It was followed by Pzena Investment Management with a $512 million position. Other investors bullish on the company included Archon Capital Management, Millennium Management, and D E Shaw. In terms of the portfolio weights assigned to each position Southport Management allocated the biggest weight to Newell Brands Inc. (NASDAQ:NWL), around 5.73% of its 13F portfolio. Icahn Capital LP is also relatively very bullish on the stock, setting aside 4.63 percent of its 13F equity portfolio to NWL.
Seeing as Newell Brands Inc. (NASDAQ:NWL) has experienced declining sentiment from the smart money, logic holds that there were a few hedge funds that decided to sell off their positions entirely last quarter. Interestingly, Brian Scudieri's Kehrs Ridge Capital dropped the largest stake of the 750 funds followed by Insider Monkey, totaling an estimated $7.3 million in stock. Ken Griffin's fund, Citadel Investment Group, also dropped its stock, about $7.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Newell Brands Inc. (NASDAQ:NWL) but similarly valued. These stocks are Pinnacle West Capital Corporation (NYSE:PNW), WEX Inc (NYSE:WEX), Store Capital Corporation (NYSE:STOR), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Ascendis Pharma A/S (NASDAQ:ASND), AMERCO (NASDAQ:UHAL), and RealPage, Inc. (NASDAQ:RP). This group of stocks' market caps match NWL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PNW,24,331462,2 WEX,26,422739,0 STOR,12,862680,-8 NBIX,31,936476,-7 ASND,31,2830045,2 UHAL,21,540146,2 RP,48,1897711,9 Average,27.6,1117323,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $1117 million. That figure was $1530 million in NWL's case. RealPage, Inc. (NASDAQ:RP) is the most popular stock in this table. On the other hand Store Capital Corporation (NYSE:STOR) is the least popular one with only 12 bullish hedge fund positions. Newell Brands Inc. (NASDAQ:NWL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NWL is 29.8. 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on NWL as the stock returned 25.9% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.