Hedge Funds Aren’t Crazy About Church & Dwight Co., Inc. (CHD) Anymore

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Church & Dwight Co., Inc. (NYSE:CHD) in this article.

Church & Dwight Co., Inc. investors should pay attention to a decrease in hedge fund interest lately. CHD was in 18 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with CHD positions 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 XL Group plc (NYSE:XL), Xilinx, Inc. (NASDAQ:XLNX), and KeyCorp (NYSE:KEY) to gather more data points.

In the eyes of most shareholders, hedge funds are seen as unimportant, old financial tools of the past. While there are greater than 8000 funds in operation at present, Our experts hone in on the elite of this group, approximately 700 funds. Most estimates calculate that this group of people command most of all hedge funds’ total asset base, and by paying attention to their best picks, Insider Monkey has revealed many investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s take a look at the fresh action encompassing Church & Dwight Co., Inc. (NYSE:CHD).

How are hedge funds trading Church & Dwight Co., Inc. (NYSE:CHD)?

Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in Church & Dwight Co., Inc. (NYSE:CHD), worth close to $101.8 million, corresponding to 0.1% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $57.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass David Harding’s Winton Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Mario Gabelli’s GAMCO Investors.

Seeing as Church & Dwight Co., Inc. (NYSE:CHD) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Joel Greenblatt’s Gotham Asset Management said goodbye to the largest position of all the hedgies followed by Insider Monkey, valued at an estimated $22.4 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dropped its stock, about $3.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Church & Dwight Co., Inc. (NYSE:CHD) but similarly valued on the next page. These stocks are XL Group plc (NYSE:XL), Xilinx, Inc. (NASDAQ:XLNX), KeyCorp (NYSE:KEY), and Laboratory Corp. of America Holdings (NYSE:LH). This group of stocks’ market valuations are closest to CHD’s market valuation.

As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $1,277 million. That figure was $295 million in CHD’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand Xilinx, Inc. (NASDAQ:XLNX) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Church & Dwight Co., Inc. (NYSE:CHD) is even less popular than XLNX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.