Is McCormick & Company, Incorporated (NYSE:MKC) going to take off soon? Money managers are getting more optimistic. The number of bullish hedge fund positions went up by 7 lately. Our calculations also showed that MKC isn’t among the 30 most popular stocks among hedge funds. MKC was in 28 hedge funds’ portfolios at the end of December. There were 21 hedge funds in our database with MKC holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the new hedge fund action regarding McCormick & Company, Incorporated (NYSE:MKC).
What does the smart money think about McCormick & Company, Incorporated (NYSE:MKC)?
At Q4’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in MKC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Point72 Asset Management was the largest shareholder of McCormick & Company, Incorporated (NYSE:MKC), with a stake worth $60.9 million reported as of the end of September. Trailing Point72 Asset Management was AQR Capital Management, which amassed a stake valued at $56.1 million. Soros Fund Management, Adage Capital Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, specific money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, initiated the most outsized position in McCormick & Company, Incorporated (NYSE:MKC). D E Shaw had $17.7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $10.7 million position during the quarter. The other funds with brand new MKC positions are Ken Griffin’s Citadel Investment Group, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Brandon Haley’s Holocene Advisors.
Let’s check out hedge fund activity in other stocks similar to McCormick & Company, Incorporated (NYSE:MKC). We will take a look at Rockwell Automation Inc. (NYSE:ROK), Stanley Black & Decker, Inc. (NYSE:SWK), Verisk Analytics, Inc. (NASDAQ:VRSK), and TransDigm Group Incorporated (NYSE:TDG). This group of stocks’ market valuations match MKC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROK | 35 | 674107 | 7 |
| SWK | 35 | 822108 | 8 |
| VRSK | 30 | 659725 | 7 |
| TDG | 47 | 4062096 | -1 |
| Average | 36.75 | 1554509 | 5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.75 hedge funds with bullish positions and the average amount invested in these stocks was $1555 million. That figure was $267 million in MKC’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Verisk Analytics, Inc. (NASDAQ:VRSK) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks McCormick & Company, Incorporated (NYSE:MKC) is even less popular than VRSK. Even though hedge fund interest in the stock is at an all time high, the overall sentiment is still very negative. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately MKC wasn’t in this group. Hedge funds that bet on MKC were disappointed as the stock returned 0.5% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
