The market has been volatile as the Federal Reserve continues its rate hikes to normalize the interest rates. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by about 4 percentage points through November 16th. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Colgate-Palmolive Company (NYSE:CL) and find out how it is affected by hedge funds’ moves.
Colgate-Palmolive Company (NYSE:CL) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that cl isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the latest hedge fund action regarding Colgate-Palmolive Company (NYSE:CL).
How are hedge funds trading Colgate-Palmolive Company (NYSE:CL)?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CL over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Colgate-Palmolive Company (NYSE:CL) was held by Renaissance Technologies, which reported holding $443.7 million worth of stock at the end of September. It was followed by D E Shaw with a $339 million position. Other investors bullish on the company included Two Sigma Advisors, Generation Investment Management, and Yacktman Asset Management.
Now, specific money managers were breaking ground themselves. Carlson Capital, managed by Clint Carlson, created the largest position in Colgate-Palmolive Company (NYSE:CL). Carlson Capital had $26.3 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also made a $11.9 million investment in the stock during the quarter. The following funds were also among the new CL investors: Ray Dalio’s Bridgewater Associates, Sander Gerber’s Hudson Bay Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s go over hedge fund activity in other stocks similar to Colgate-Palmolive Company (NYSE:CL). We will take a look at CME Group Inc (NASDAQ:CME), Vodafone Group Plc (NASDAQ:VOD), Duke Energy Corporation (NYSE:DUK), and Twenty-First Century Fox Inc (NASDAQ:FOXA). This group of stocks’ market caps are similar to CL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CME | 53 | 2018368 | 5 |
| VOD | 18 | 944408 | 0 |
| DUK | 17 | 1227955 | -7 |
| FOXA | 73 | 10493159 | -5 |
| Average | 40.25 | 3670973 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.25 hedge funds with bullish positions and the average amount invested in these stocks was $3.67 billion. That figure was $1.74 billion in CL’s case. Twenty-First Century Fox Inc (NASDAQ:FOXA) is the most popular stock in this table. On the other hand Duke Energy Corporation (NYSE:DUK) is the least popular one with only 17 bullish hedge fund positions. Colgate-Palmolive Company (NYSE:CL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FOXA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
