The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider The Sherwin-Williams Company (NYSE:SHW) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is SHW a good stock to buy? The Sherwin-Williams Company (NYSE:SHW) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. The Sherwin-Williams Company (NYSE:SHW) was in 44 hedge funds’ portfolios at the end of September. The all time high for this statistic is 57. There were 49 hedge funds in our database with SHW holdings at the end of June. Our calculations also showed that SHW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Richard Chilton of Chilton Investment Company
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s go over the latest hedge fund action regarding The Sherwin-Williams Company (NYSE:SHW).
Do Hedge Funds Think SHW Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in SHW over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Sherwin-Williams Company (NYSE:SHW) was held by Chilton Investment Company, which reported holding $323.9 million worth of stock at the end of September. It was followed by Farallon Capital with a $271.3 million position. Other investors bullish on the company included Alkeon Capital Management, Citadel Investment Group, and Echo Street Capital Management. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to The Sherwin-Williams Company (NYSE:SHW), around 7.99% of its 13F portfolio. Bluegrass Capital Partners is also relatively very bullish on the stock, earmarking 6.96 percent of its 13F equity portfolio to SHW.
Since The Sherwin-Williams Company (NYSE:SHW) has witnessed falling interest from hedge fund managers, logic holds that there is a sect of money managers that slashed their entire stakes heading into Q4. At the top of the heap, Matthew Stadelman’s Diamond Hill Capital sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $243.4 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dropped about $74.7 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Sherwin-Williams Company (NYSE:SHW) but similarly valued. We will take a look at Capital One Financial Corp. (NYSE:COF), Fiserv, Inc. (NASDAQ:FISV), Equinix Inc (NASDAQ:EQIX), Becton, Dickinson and Company (NYSE:BDX), Edwards Lifesciences Corporation (NYSE:EW), Vale SA (NYSE:VALE), and DoorDash, Inc. (NYSE:DASH). This group of stocks’ market valuations are similar to SHW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COF | 55 | 4708790 | -9 |
| FISV | 65 | 3945223 | -7 |
| EQIX | 31 | 1195457 | -2 |
| BDX | 51 | 2339968 | -1 |
| EW | 43 | 2169239 | -4 |
| VALE | 27 | 1979876 | 0 |
| DASH | 42 | 9358288 | -3 |
| Average | 44.9 | 3670977 | -3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.9 hedge funds with bullish positions and the average amount invested in these stocks was $3671 million. That figure was $1577 million in SHW’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Vale SA (NYSE:VALE) is the least popular one with only 27 bullish hedge fund positions. The Sherwin-Williams Company (NYSE:SHW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SHW is 45.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on SHW as the stock returned 18.6% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.
Follow Sherwin Williams Co (NYSE:SHW)
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Disclosure: None. This article was originally published at Insider Monkey.
