Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of The Sherwin-Williams Company (NYSE:SHW) based on that data and determine whether they were really smart about the stock.
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. SHW has seen a decrease in hedge fund interest lately. 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).
David E. Shaw of D.E. Shaw
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. With all of this in mind we’re going to go over the latest hedge fund action encompassing 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 were bullish on this stock, a change of -10% from the second quarter of 2021. On the other hand, there were a total of 55 hedge funds with a bullish position in SHW a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
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, setting aside 6.96 percent of its 13F equity portfolio to SHW.
Judging by the fact that The Sherwin-Williams Company (NYSE:SHW) has experienced a decline in interest from hedge fund managers, logic holds that there exists a select few fund managers who were dropping their entire stakes by the end of the third quarter. It’s worth mentioning that Matthew Stadelman’s Diamond Hill Capital cut the biggest investment of the 750 funds tracked by Insider Monkey, worth close to $243.4 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $74.7 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to The Sherwin-Williams Company (NYSE:SHW). 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 match 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on SHW as the stock returned 2.6% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
