We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Kimberly-Clark Corporation (NYSE:KMB).
Is Kimberly-Clark Corporation (NYSE:KMB) going to take off soon? Investors who are in the know are betting on the stock. The number of bullish hedge fund positions moved up by 4 recently. Our calculations also showed that KMB isn’t among the 30 most popular stocks among hedge funds. KMB was in 40 hedge funds’ portfolios at the end of June. There were 36 hedge funds in our database with KMB holdings at the end of the previous quarter.
In the financial world there are a large number of formulas market participants can use to assess their holdings. A couple of the less utilized formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top money managers can outpace the S&P 500 by a significant margin (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the new hedge fund action encompassing Kimberly-Clark Corporation (NYSE:KMB).
Hedge fund activity in Kimberly-Clark Corporation (NYSE:KMB)
Heading into the third quarter of 2019, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in KMB a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Kimberly-Clark Corporation (NYSE:KMB), with a stake worth $357.6 million reported as of the end of March. Trailing Citadel Investment Group was AQR Capital Management, which amassed a stake valued at $237.1 million. Diamond Hill Capital, Millennium Management, and Alkeon Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, some big names have jumped into Kimberly-Clark Corporation (NYSE:KMB) headfirst. Suvretta Capital Management, managed by Aaron Cowen, assembled the biggest position in Kimberly-Clark Corporation (NYSE:KMB). Suvretta Capital Management had $97.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $84.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, Sara Nainzadeh’s Centenus Global Management, and Jeffrey Talpins’s Element Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Kimberly-Clark Corporation (NYSE:KMB) but similarly valued. We will take a look at Infosys Limited (NYSE:INFY), HCA Healthcare Inc (NYSE:HCA), UBS Group AG (NYSE:UBS), and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). This group of stocks’ market caps are similar to KMB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INFY | 25 | 1151865 | 5 |
| HCA | 51 | 3049357 | 0 |
| UBS | 14 | 796197 | 3 |
| VRTX | 40 | 2385510 | -5 |
| Average | 32.5 | 1845732 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $1846 million. That figure was $1547 million in KMB’s case. HCA Healthcare Inc (NYSE:HCA) is the most popular stock in this table. On the other hand UBS Group AG (NYSE:UBS) is the least popular one with only 14 bullish hedge fund positions. Kimberly-Clark Corporation (NYSE:KMB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on KMB as the stock returned 7.4% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
