Is CLX Stock A Buy or Sell?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The Clorox Company (NYSE:CLX).

Is CLX stock a buy or sell? The Clorox Company (NYSE:CLX) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 39 hedge funds’ portfolios at the end of December. Our calculations also showed that CLX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). 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 Dollar Tree, Inc. (NASDAQ:DLTR), Skyworks Solutions Inc (NASDAQ:SWKS), and First Republic Bank (NYSE:FRC) to gather more data points.

In the 21st century investor’s toolkit there are tons of gauges stock traders employ to assess stocks. A pair of the most under-the-radar gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best investment managers can outpace the S&P 500 by a significant amount (see the details here).

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to go over the fresh hedge fund action surrounding The Clorox Company (NYSE:CLX).

Do Hedge Funds Think CLX Is A Good Stock To Buy Now?

At the end of December, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CLX over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cedar Rock Capital, managed by Andy Brown, holds the most valuable position in The Clorox Company (NYSE:CLX). Cedar Rock Capital has a $388.4 million position in the stock, comprising 8.4% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $334.2 million position; 0.4% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Cliff Asness’s AQR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Cedar Rock Capital allocated the biggest weight to The Clorox Company (NYSE:CLX), around 8.4% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 1.43 percent of its 13F equity portfolio to CLX.

Because The Clorox Company (NYSE:CLX) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds who were dropping their full holdings heading into Q1. It’s worth mentioning that Jinghua Yan’s TwinBeech Capital said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, totaling close to $1.9 million in stock. Ran Pang’s fund, Quantamental Technologies, also dropped its stock, about $1.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to The Clorox Company (NYSE:CLX). We will take a look at Dollar Tree, Inc. (NASDAQ:DLTR), Skyworks Solutions Inc (NASDAQ:SWKS), First Republic Bank (NYSE:FRC), Hormel Foods Corporation (NYSE:HRL), D.R. Horton, Inc. (NYSE:DHI), Weyerhaeuser Co. (NYSE:WY), and ZTO Express (Cayman) Inc. (NYSE:ZTO). All of these stocks’ market caps are similar to CLX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $1071 million. That figure was $1653 million in CLX’s case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 17 bullish hedge fund positions. The Clorox Company (NYSE:CLX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CLX is 56.9. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately CLX wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); CLX investors were disappointed as the stock returned -7.3% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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