Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 Coty Inc (NYSE:COTY).
Is Coty Inc (NYSE:COTY) the right pick for your portfolio? Money managers were taking an optimistic view. The number of bullish hedge fund bets moved up by 10 lately. Coty Inc (NYSE:COTY) was in 40 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 46. Our calculations also showed that COTY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. Now let’s review the recent hedge fund action regarding Coty Inc (NYSE:COTY).
Peter Rathjens of Arrowstreet Capital
Do Hedge Funds Think COTY Is A Good Stock To Buy Now?
At Q3’s end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2021. On the other hand, there were a total of 26 hedge funds with a bullish position in COTY a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Coty Inc (NYSE:COTY) was held by Melvin Capital Management, which reported holding $117.9 million worth of stock at the end of September. It was followed by Melvin Capital Management with a $94.3 million position. Other investors bullish on the company included Point72 Asset Management, Prentice Capital Management, and Candlestick Capital Management. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to Coty Inc (NYSE:COTY), around 15.21% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, setting aside 3.26 percent of its 13F equity portfolio to COTY.
As aggregate interest increased, key hedge funds have jumped into Coty Inc (NYSE:COTY) headfirst. Melvin Capital Management, managed by Gabriel Plotkin, established the biggest call position in Coty Inc (NYSE:COTY). Melvin Capital Management had $94.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $15.3 million investment in the stock during the quarter. The other funds with brand new COTY positions are Paul Tudor Jones’s Tudor Investment Corp, Mike Masters’s Masters Capital Management, and Matthew L Pinz’s Pinz Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Coty Inc (NYSE:COTY) but similarly valued. These stocks are MasTec, Inc. (NYSE:MTZ), Elbit Systems Ltd. (NASDAQ:ESLT), KT Corporation (NYSE:KT), Nexstar Media Group, Inc. (NASDAQ:NXST), Texas Roadhouse Inc (NASDAQ:TXRH), Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), and Stag Industrial Inc (NYSE:STAG). This group of stocks’ market caps are similar to COTY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTZ | 24 | 439777 | -15 |
| ESLT | 4 | 56484 | 0 |
| KT | 12 | 166766 | -2 |
| NXST | 38 | 874017 | 4 |
| TXRH | 36 | 993486 | -1 |
| WOOF | 26 | 319858 | -1 |
| STAG | 17 | 219383 | 2 |
| Average | 22.4 | 438539 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $439 million. That figure was $519 million in COTY’s case. Nexstar Media Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Coty Inc (NYSE:COTY) is more popular among hedge funds. Our overall hedge fund sentiment score for COTY is 86.1. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on COTY as the stock returned 23.8% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Coty Inc. (NYSE:COTY)
Follow Coty Inc. (NYSE:COTY)
Suggested Articles:
- 15 Largest Entertainment Companies
- 10 Best Undervalued Stocks to Buy Now
- 10 Best Beauty Stocks to Invest In
Disclosure: None. This article was originally published at Insider Monkey.
