Do Hedge Funds Love Clorox Company (CLX)?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Clorox Company (NYSE:CLX)? The smart money sentiment can provide an answer to this question.

Clorox Company (NYSE:CLX) was in 31 hedge funds’ portfolios at the end of the third quarter of 2015. Clorox Company (NYSE:CLX) has seen an increase in hedge fund interest lately. There were 27 hedge funds in our database with Clorox Company (NYSE:CLX) holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Apache Corporation (NYSE:APA), Essex Property Trust Inc (NYSE:ESS), and Palo Alto Networks Inc (NYSE:PANW) to gather more data points.

In the eyes of most traders, hedge funds are assumed to be unimportant, old investment tools of yesteryear. While there are over 8000 funds in operation at the moment, Our researchers look at the top tier of this group, about 700 funds. Most estimates calculate that this group of people controls the majority of the hedge fund industry’s total capital, and by observing their first-class stock picks, Insider Monkey has uncovered a number of investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, we’re going to go over the latest action surrounding Clorox Company (NYSE:CLX).

How have hedgies been trading Clorox Company (NYSE:CLX)?

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 15% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cedar Rock Capital, managed by Andy Brown, holds the biggest position in Clorox Company (NYSE:CLX). Cedar Rock Capital has a $361.9 million position in the stock, comprising 9.4% of its 13F portfolio. On Cedar Rock Capital’s heels is Renaissance Technologies, holding a $211.3 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Donald Yacktman’s Yacktman Asset Management, Cliff Asness’ AQR Capital Management, and David Harding’s Winton Capital Management.

Consequently, specific money managers have jumped into Clorox Company (NYSE:CLX) headfirst. Millennium Management, managed by Israel Englander, created the largest position in Clorox Company (NYSE:CLX). Millennium Management had $16.7 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also initiated a $16.5 million position during the quarter. The other funds with new positions in the stock are Andrew Sandler’s Sandler Capital Management, Soros Fund Management, and D E Shaw.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Clorox Company (NYSE:CLX) but similarly valued. We will take a look at Apache Corporation (NYSE:APA), Essex Property Trust Inc (NYSE:ESS), Palo Alto Networks Inc (NYSE:PANW), and Check Point Software Technologies Ltd. (NASDAQ:CHKP). This group of stocks’ market values is similar to Clorox Company (NYSE:CLX)’s market value.

As you can see, these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $990 million. That figure was $904 million in Clorox Company (NYSE:CLX)’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand, Essex Property Trust Inc (NYSE:ESS) is the least popular one with only 22 bullish hedge fund positions. The Clorox Company (NYSE:CLX) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Palo Alto Networks Inc (NYSE:PANW) might be a better candidate to consider a long position.