Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Newell Brands Inc (NYSE:NWL).
Newell Brands Inc (NYSE:NWL) has experienced a decrease in enthusiasm from smart money recently. NWL was in 39 hedge funds’ portfolios at the end of the third quarter of 2016. There were 51 hedge funds in our database with NWL holdings at the end of the previous quarter. At the end of this article we will also compare NWL to other stocks including Universal Health Services, Inc. (NYSE:UHS), Ameren Corp (NYSE:AEE), and Perrigo Company (NASDAQ:PRGO) to get a better sense of its popularity.
Follow Newell Brands Inc. (NYSE:NWL)
Follow Newell Brands Inc. (NYSE:NWL)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, we’re going to take a look at the latest action regarding Newell Newell Brands Inc (NYSE:NWL).
What does the smart money think about Newell Brands Inc (NYSE:NWL)?
At Q3’s end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 24% drop from one quarter earlier. However, it should be noted that ownership is still higher than it was at the end of the first quarter, following a huge Q2 buying spree by hedge funds. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the largest position in Newell Brands Inc (NYSE:NWL). Iridian Asset Management has a $188.7 million position in the stock, comprising 1.6% of its 13F portfolio. The second largest stake is held by Steve Cohen of Point72 Asset Management, with a $137.4 million position. Remaining members of the smart money that are bullish comprise Ric Dillon’s Diamond Hill Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Mark Kingdon’s Kingdon Capital.
Due to the fact that Newell Brands Inc (NYSE:NWL) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there were a few money managers that decided to sell off their entire stakes last quarter. It’s worth mentioning that Andreas Halvorsen’s Viking Global dumped the largest position of the 700 funds watched by Insider Monkey, worth about $482.6 million in stock, and Bain Capital’s Brookside Capital was right behind this move, as the fund sold off about $99.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 12 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Newell Brands Inc (NYSE:NWL) but similarly valued. These stocks are Universal Health Services, Inc. (NYSE:UHS), Ameren Corp (NYSE:AEE), Perrigo Company (NASDAQ:PRGO), and Fidelity National Financial Inc (NYSE:FNF). This group of stocks’ market values resemble NWL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UHS | 33 | 1640394 | -9 |
| AEE | 12 | 432193 | -3 |
| PRGO | 30 | 1620457 | 2 |
| FNF | 37 | 1124880 | -2 |
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1.20 billion. That figure was $1.71 billion in NWL’s case. Fidelity National Financial Inc (NYSE:FNF) is the most popular stock in this table. On the other hand Ameren Corp (NYSE:AEE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Newell Brands Inc (NYSE:NWL) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio, bearing in mind that a lot of top investors sold it off last quarter.
Disclosure: None
