Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Procter & Gamble Company (NYSE:PG) from the perspective of those elite funds.
Procter & Gamble Company (NYSE:PG) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 58 hedge funds’ portfolios at the end of September. 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 Pfizer Inc. (NYSE:PFE), Toyota Motor Corporation (ADR) (NYSE:TM), and Verizon Communications Inc. (NYSE:VZ) to gather more data points.
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Follow Procter & Gamble Co (NYSE:PG)
According to most shareholders, hedge funds are perceived as slow, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, our experts hone in on the elite of this club, approximately 700 funds. These hedge fund managers control the lion’s share of all hedge funds’ total asset base, and by keeping track of their matchless investments, Insider Monkey has formulated a few investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, we’re going to analyze the latest action encompassing Procter & Gamble Company (NYSE:PG).
What have hedge funds been doing with Procter & Gamble Company (NYSE:PG)?
Heading into Q4, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Berkshire Hathaway has the largest position in Procter & Gamble Company (NYSE:PG), worth close to $3.80 billion, amounting to 3% of its total 13F portfolio. Coming in second is Yacktman Asset Management, led by Donald Yacktman, holding a $2.01 billion position; the fund has 13.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of Andy Brown’s Cedar Rock Capital, Ken Fisher’s Fisher Asset Management, and Cliff Asness’ AQR Capital Management.
Judging by the fact that Procter & Gamble Company (NYSE:PG) has faced a falling interest from hedge fund managers, it’s safe to say that there were a few money managers who sold off their positions entirely last quarter. At the top of the heap, Clint Carlson’s Carlson Capital cut the largest position of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $59.9 million in stock, and Neil Chriss’ Hutchin Hill Capital was right behind this move, as the fund dropped about $43 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Procter & Gamble Company (NYSE:PG) but similarly valued. These stocks are Pfizer Inc. (NYSE:PFE), Toyota Motor Corporation (ADR) (NYSE:TM), Verizon Communications Inc. (NYSE:VZ), and The Coca-Cola Company (NYSE:KO). This group of stocks’ market valuations resembles Procter & Gamble Company (NYSE:PG)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFE | 97 | 6090993 | 12 |
| TM | 13 | 229565 | 2 |
| VZ | 59 | 2525387 | -3 |
| KO | 54 | 19334449 | -8 |
As you can see, these stocks had an average of 56 hedge funds with bullish positions and the average amount invested in these stocks was $7.05 billion. That figure was $9.06 billion in Procter & Gamble Company (NYSE:PG)’s case. Pfizer Inc. (NYSE:PFE) is the most popular stock in this table. On the other hand, Toyota Motor Corporation (ADR) (NYSE:TM) is the least popular one with only 13 bullish hedge fund positions. Procter & Gamble Company (NYSE:PG) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Pfizer Inc. (NYSE:PFE) might be a better candidate to consider a long position.
