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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards The Procter & Gamble Company (NYSE:PG).
The Procter & Gamble Company (NYSE:PG) has seen an increase in activity from the world's largest hedge funds recently. The Procter & Gamble Company (NYSE:PG) was in 75 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 79. There were 73 hedge funds in our database with PG positions at the end of the second quarter. Our calculations also showed that PG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are viewed as slow, old financial tools of years past. While there are over 8000 funds trading at present, We look at the upper echelon of this group, approximately 850 funds. These hedge fund managers preside over the lion's share of the smart money's total capital, and by paying attention to their finest picks, Insider Monkey has unsheathed various investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 we're going to take a gander at the key hedge fund action encompassing The Procter & Gamble Company (NYSE:PG).
What does smart money think about The Procter & Gamble Company (NYSE:PG)?
At Q3's end, a total of 75 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PG over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Cedar Rock Capital, managed by Andy Brown, holds the most valuable position in The Procter & Gamble Company (NYSE:PG). Cedar Rock Capital has a $1.5326 billion position in the stock, comprising 34.9% of its 13F portfolio. The second most bullish fund manager is Trian Partners, led by Nelson Peltz, holding a $1.4078 billion position; the fund has 23.3% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Rajiv Jain's GQG Partners and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Cedar Rock Capital allocated the biggest weight to The Procter & Gamble Company (NYSE:PG), around 34.87% of its 13F portfolio. Trian Partners is also relatively very bullish on the stock, earmarking 23.26 percent of its 13F equity portfolio to PG.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. Bridgewater Associates, managed by Ray Dalio, initiated the most outsized position in The Procter & Gamble Company (NYSE:PG). Bridgewater Associates had $170.3 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also made a $149.6 million investment in the stock during the quarter. The other funds with brand new PG positions are Matthew Tewksbury's Stevens Capital Management, Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, and David Costen Haley's HBK Investments.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as The Procter & Gamble Company (NYSE:PG) but similarly valued. We will take a look at Mastercard Incorporated (NYSE:MA), NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), UnitedHealth Group Inc. (NYSE:UNH), JPMorgan Chase & Co. (NYSE:JPM), Verizon Communications Inc. (NYSE:VZ), and Adobe Inc. (NASDAQ:ADBE). All of these stocks' market caps are closest to PG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MA,133,15645517,-14 NVDA,82,7672045,-10 HD,73,4957355,-12 UNH,89,8963458,-7 JPM,118,6058434,-5 VZ,65,2759911,-3 ADBE,106,10503167,2 Average,95.1,8079984,-7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 95.1 hedge funds with bullish positions and the average amount invested in these stocks was $8080 million. That figure was $10091 million in PG's case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand Verizon Communications Inc. (NYSE:VZ) is the least popular one with only 65 bullish hedge fund positions. The Procter & Gamble Company (NYSE:PG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PG is 42.8. 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately PG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PG investors were disappointed as the stock returned 0.3% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.