The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Ecolab Inc. (NYSE:ECL) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Ecolab Inc. (NYSE:ECL) has experienced a decrease in hedge fund sentiment lately. Ecolab Inc. (NYSE:ECL) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 52. Our calculations also showed that ECL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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 we’re going to take a look at the key hedge fund action encompassing Ecolab Inc. (NYSE:ECL).
William Von Mueffling of Cantillon Capital Management
Do Hedge Funds Think ECL Is A Good Stock To Buy Now?
At third quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the second quarter of 2021. By comparison, 52 hedge funds held shares or bullish call options in ECL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Bill & Melinda Gates Foundation Trust was the largest shareholder of Ecolab Inc. (NYSE:ECL), with a stake worth $910.9 million reported as of the end of September. Trailing Bill & Melinda Gates Foundation Trust was Impax Asset Management, which amassed a stake valued at $708.6 million. Cantillon Capital Management, Two Sigma Advisors, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bill & Melinda Gates Foundation Trust allocated the biggest weight to Ecolab Inc. (NYSE:ECL), around 3.93% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, dishing out 2.97 percent of its 13F equity portfolio to ECL.
Judging by the fact that Ecolab Inc. (NYSE:ECL) has faced declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of hedgies that decided to sell off their entire stakes last quarter. Interestingly, Renaissance Technologies sold off the biggest investment of the 750 funds monitored by Insider Monkey, comprising an estimated $40.3 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $24.6 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 9 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Ecolab Inc. (NYSE:ECL). We will take a look at Eaton Corporation plc (NYSE:ETN), Norfolk Southern Corp. (NYSE:NSC), Dominion Energy Inc. (NYSE:D), America Movil SAB de CV (NYSE:AMX), NIO Inc. (NYSE:NIO), FedEx Corporation (NYSE:FDX), and América Móvil, S.A.B. de C.V. (NYSE:AMOV). This group of stocks’ market values are closest to ECL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETN | 45 | 1089775 | 5 |
| NSC | 46 | 1049404 | -12 |
| D | 27 | 545194 | -7 |
| AMX | 11 | 167723 | -2 |
| NIO | 30 | 1138194 | -4 |
| FDX | 49 | 1682204 | -12 |
| AMOV | 1 | 300 | 0 |
| Average | 29.9 | 810399 | -4.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $810 million. That figure was $2552 million in ECL’s case. FedEx Corporation (NYSE:FDX) is the most popular stock in this table. On the other hand América Móvil, S.A.B. de C.V. (NYSE:AMOV) is the least popular one with only 1 bullish hedge fund positions. Ecolab Inc. (NYSE:ECL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ECL is 58.1. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, ECL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ECL were disappointed as the stock returned -9% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Ecolab Inc. (NYSE:ECL)
Follow Ecolab Inc. (NYSE:ECL)
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Disclosure: None. This article was originally published at Insider Monkey.
