The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Stanley Black & Decker, Inc. (NYSE:SWK) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Is Stanley Black & Decker, Inc. (NYSE:SWK) a buy here? Hedge funds were taking a bearish view. The number of long hedge fund positions were trimmed by 7 in recent months. Stanley Black & Decker, Inc. (NYSE:SWK) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that SWK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a peek at the new hedge fund action surrounding Stanley Black & Decker, Inc. (NYSE:SWK).
Do Hedge Funds Think SWK Is A Good Stock To Buy Now?
At Q3’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SWK over the last 25 quarters. 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 $177.5 million worth of stock at the end of September. It was followed by D E Shaw with a $105.9 million position. Other investors bullish on the company included AQR Capital Management, GLG Partners, and Sculptor Capital. In terms of the portfolio weights assigned to each position Columbus Point allocated the biggest weight to Stanley Black & Decker, Inc. (NYSE:SWK), around 4.57% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, dishing out 0.7 percent of its 13F equity portfolio to SWK.
Because Stanley Black & Decker, Inc. (NYSE:SWK) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of funds that decided to sell off their full holdings in the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest investment of the 750 funds followed by Insider Monkey, totaling an estimated $21.3 million in stock. Donald Sussman’s fund, Paloma Partners, also cut its stock, about $15.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 7 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Stanley Black & Decker, Inc. (NYSE:SWK). These stocks are Chewy, Inc. (NYSE:CHWY), United Microelectronics Corp (NYSE:UMC), Eversource Energy (NYSE:ES), Las Vegas Sands Corp. (NYSE:LVS), Yandex NV (NASDAQ:YNDX), Synchrony Financial (NYSE:SYF), and WEC Energy Group, Inc. (NYSE:WEC). This group of stocks’ market caps match SWK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHWY | 32 | 376172 | -11 |
| UMC | 13 | 151038 | 3 |
| ES | 21 | 137293 | -5 |
| LVS | 40 | 938057 | -8 |
| YNDX | 27 | 1432186 | -4 |
| SYF | 35 | 1376950 | -4 |
| WEC | 31 | 432498 | 4 |
| Average | 28.4 | 692028 | -3.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $692 million. That figure was $776 million in SWK’s case. Las Vegas Sands Corp. (NYSE:LVS) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) 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 67.7. 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 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on SWK as the stock returned 0.1% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Stanley Black & Decker Inc. (NYSE:SWK)
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Disclosure: None. This article was originally published at Insider Monkey.
