We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Edgewell Personal Care Company (NYSE:EPC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Edgewell Personal Care Company (NYSE:EPC) the right investment to pursue these days? Investors who are in the know are betting on the stock. The number of bullish hedge fund positions moved up by 6 in recent months. Our calculations also showed that EPC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). EPC was in 26 hedge funds’ portfolios at the end of December. There were 20 hedge funds in our database with EPC holdings at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
George Soros of Soros Fund Management
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the recent hedge fund action encompassing Edgewell Personal Care Company (NYSE:EPC).
What have hedge funds been doing with Edgewell Personal Care Company (NYSE:EPC)?
At the end of the fourth quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EPC over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in Edgewell Personal Care Company (NYSE:EPC), worth close to $65.7 million, corresponding to 0.5% of its total 13F portfolio. On GAMCO Investors’s heels is Armistice Capital, led by Steven Boyd, holding a $46.4 million call position; the fund has 2.7% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Brett Barakett’s Tremblant Capital, George Soros’s Soros Fund Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Edgewell Personal Care Company (NYSE:EPC), around 2.68% of its 13F portfolio. Tremblant Capital is also relatively very bullish on the stock, designating 1.7 percent of its 13F equity portfolio to EPC.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Edgewell Personal Care Company (NYSE:EPC) headfirst. Renaissance Technologies, initiated the most outsized position in Edgewell Personal Care Company (NYSE:EPC). Renaissance Technologies had $8.4 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $4.5 million investment in the stock during the quarter. The following funds were also among the new EPC investors: Noam Gottesman’s GLG Partners, Benjamin A. Smith’s Laurion Capital Management, and Peter Muller’s PDT Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Edgewell Personal Care Company (NYSE:EPC) but similarly valued. We will take a look at Park National Corporation (NYSE:PRK), Core Laboratories N.V. (NYSE:CLB), Mobile Mini Inc (NASDAQ:MINI), and Denali Therapeutics Inc. (NASDAQ:DNLI). This group of stocks’ market caps are closest to EPC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRK | 10 | 15018 | 1 |
| CLB | 25 | 118775 | 9 |
| MINI | 24 | 193790 | 2 |
| DNLI | 9 | 28103 | 1 |
| Average | 17 | 88922 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $234 million in EPC’s case. Core Laboratories N.V. (NYSE:CLB) is the most popular stock in this table. On the other hand Denali Therapeutics Inc. (NASDAQ:DNLI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Edgewell Personal Care Company (NYSE:EPC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but still managed to beat the market by 4.2 percentage points. Hedge funds were also right about betting on EPC as the stock returned -11.8% so far in 2020 (through April 6th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
