Here’s Why ClearBridge Investments Sold its Home Depot (HD) Stake

ClearBridge Investments, an investment management firm, published its “Large Cap Growth Strategy” first quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Large Cap Growth Strategy underperformed its Russell 1000 Growth Index benchmark during the first quarter. On an absolute basis, the Strategy suffered losses across seven of the eight sectors in which it was invested (out of 11 sectors total). The leading detractors of performance were in the communication services and information technology (IT) sectors, while the financials sector was a contributor. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, ClearBridge Investments Large Cap Growth Strategy mentioned The Home Depot, Inc. (NYSE:HD) and explained its insights for the company. Founded in 1978, The Home Depot, Inc. (NYSE:HD)  is an Atlanta, Georgia-based home improvement company with a $320.7 billion market capitalization. The Home Depot, Inc. (NYSE:HD)  delivered a -26.62% return since the beginning of the year, while its 12-month returns are down by -5.65%. The stock closed at $304.52 per share on April 14, 2022.

Here is what ClearBridge Investments Large Cap Growth Strategy has to say about The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter:

“Other actions during the quarter included the sale of consumer name Home Depot (NYSE:HD). The Home Depot move is based on where we are in the consumer and housing cycle as we come out of a period of nesting and dedensification and as government stimulus related to COVID-19 expires. The company has effectively pulled forward demand over the last two years and taken share because of in-stock inventory availability relative to peers. Many of those tailwinds are now turning neutral to negative and our thesis for Home Depot of optimizing the business in terms of merchandising/inventory, omnichannel, PRO/DIY mix, labor and distribution centers has played out. The exit is part of our efforts to reduce consumer discretionary exposure and provide better downside protection if volatility persists.”

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Our calculations show that The Home Depot, Inc. (NYSE:HD) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. The Home Depot, Inc. (NYSE:HD) was in 68 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 58 funds in the previous quarter. The Home Depot, Inc. (NYSE:HD) delivered a -21.31% return in the past 3 months.

In January 2022, we published an article that includes The Home Depot, Inc. (NYSE:HD) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.