Is Estee Lauder Companies Inc (NYSE:EL) a healthy stock for your portfolio? Hedge funds are becoming more confident. The number of bullish hedge fund positions advanced by 6 lately.
If you’d ask most market participants, hedge funds are seen as slow, old investment vehicles of years past. While there are more than 8000 funds trading today, we hone in on the top tier of this club, around 450 funds. It is estimated that this group controls the majority of all hedge funds’ total asset base, and by watching their best stock picks, we have deciphered a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as important, optimistic insider trading sentiment is another way to break down the investments you’re interested in. There are lots of stimuli for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this tactic if “monkeys” know what to do (learn more here).
Consequently, we’re going to take a glance at the key action encompassing Estee Lauder Companies Inc (NYSE:EL).
How are hedge funds trading Estee Lauder Companies Inc (NYSE:EL)?
In preparation for this quarter, a total of 30 of the hedge funds we track held long positions in this stock, a change of 25% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully.
According to our comprehensive database, Andreas Halvorsen’s Viking Global had the largest position in Estee Lauder Companies Inc (NYSE:EL), worth close to $256 million, accounting for 1.5% of its total 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $114.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Robert Karr’s Joho Capital, Donald Chiboucis’s Columbus Circle Investors and Ken Griffin’s Citadel Investment Group.
Now, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, created the biggest call position in Estee Lauder Companies Inc (NYSE:EL). Millennium Management had 9.6 million invested in the company at the end of the quarter. David Keidan’s Buckingham Capital Management also initiated a $7.4 million position during the quarter. The following funds were also among the new EL investors: David Costen Haley’s HBK Investments, Mark Kingdon’s Kingdon Capital, and Matthew Tewksbury’s Stevens Capital Management.
What do corporate executives and insiders think about Estee Lauder Companies Inc (NYSE:EL)?
Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past half-year. Over the latest half-year time frame, Estee Lauder Companies Inc (NYSE:EL) has seen zero unique insiders purchasing, and 12 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Estee Lauder Companies Inc (NYSE:EL). These stocks are The Procter & Gamble Company (NYSE:PG), Energizer Holdings, Inc. (NYSE:ENR), Avon Products, Inc. (NYSE:AVP), Colgate-Palmolive Company (NYSE:CL), and Kimberly Clark Corp (NYSE:KMB). All of these stocks are in the personal products industry and their market caps match EL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| The Procter & Gamble Company (NYSE:PG) | 58 | 0 | 7 |
| Energizer Holdings, Inc. (NYSE:ENR) | 21 | 0 | 7 |
| Avon Products, Inc. (NYSE:AVP) | 25 | 1 | 1 |
| Colgate-Palmolive Company (NYSE:CL) | 29 | 0 | 24 |
| Kimberly Clark Corp (NYSE:KMB) | 20 | 0 | 8 |
With the results shown by Insider Monkey’s studies, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Estee Lauder Companies Inc (NYSE:EL) shareholders fit into this picture quite nicely.
