In this article we will take a look at whether hedge funds think McCormick & Company, Incorporated (NYSE:MKC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is McCormick & Company, Incorporated (NYSE:MKC) the right pick for your portfolio? Prominent investors were reducing their bets on the stock. The number of bullish hedge fund bets shrunk by 1 lately. McCormick & Company, Incorporated (NYSE:MKC) was in 34 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 37. Our calculations also showed that MKC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Cliff Asness of AQR Capital Management
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Do Hedge Funds Think MKC Is A Good Stock To Buy Now?
At the end of June, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in MKC a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Fundsmith LLP held the most valuable stake in McCormick & Company, Incorporated (NYSE:MKC), which was worth $1572.5 million at the end of the second quarter. On the second spot was Impax Asset Management which amassed $55.6 million worth of shares. Millennium Management, AQR Capital Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fundsmith LLP allocated the biggest weight to McCormick & Company, Incorporated (NYSE:MKC), around 4.36% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.55 percent of its 13F equity portfolio to MKC.
Since McCormick & Company, Incorporated (NYSE:MKC) has witnessed a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of hedge funds that elected to cut their entire stakes in the second quarter. Intriguingly, Robert Joseph Caruso’s Select Equity Group sold off the biggest stake of all the hedgies followed by Insider Monkey, comprising close to $57.5 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund cut about $30.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to McCormick & Company, Incorporated (NYSE:MKC). We will take a look at Cerner Corporation (NASDAQ:CERN), United Microelectronics Corp (NYSE:UMC), POSCO (NYSE:PKX), Vulcan Materials Company (NYSE:VMC), United Rentals, Inc. (NYSE:URI), Dollar Tree, Inc. (NASDAQ:DLTR), and NovoCure Limited (NASDAQ:NVCR). This group of stocks’ market valuations match MKC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CERN | 38 | 1394559 | -2 |
| UMC | 10 | 141218 | -1 |
| PKX | 12 | 161569 | 0 |
| VMC | 43 | 1374916 | -5 |
| URI | 47 | 1173038 | 6 |
| DLTR | 42 | 1379674 | 1 |
| NVCR | 25 | 500806 | 3 |
| Average | 31 | 875111 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $875 million. That figure was $2032 million in MKC’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) is the least popular one with only 10 bullish hedge fund positions. McCormick & Company, Incorporated (NYSE:MKC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MKC is 64. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately MKC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MKC were disappointed as the stock returned -10.5% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
