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 at 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. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Zoetis Inc (NYSE:ZTS) and determine whether the smart money was really smart about this stock.
Hedge fund interest in Zoetis Inc (NYSE:ZTS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ZTS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare ZTS to other stocks including BP plc (NYSE:BP), Snowflake Inc (NYSE:SNOW), and Anthem Inc (NYSE:ANTM) to get a better sense of its popularity.
Peter Rathjens of Arrowstreet Capital
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 take a look at the recent hedge fund action surrounding Zoetis Inc (NYSE:ZTS).
Do Hedge Funds Think ZTS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 58 hedge funds held shares or bullish call options in ZTS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Cantillon Capital Management held the most valuable stake in Zoetis Inc (NYSE:ZTS), which was worth $428.4 million at the end of the third quarter. On the second spot was Ako Capital which amassed $418.6 million worth of shares. Arrowstreet Capital, Intermede Investment Partners, and Renaissance Technologies 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 Bristol Gate Capital Partners allocated the biggest weight to Zoetis Inc (NYSE:ZTS), around 5.28% of its 13F portfolio. Intermede Investment Partners is also relatively very bullish on the stock, earmarking 4.84 percent of its 13F equity portfolio to ZTS.
Due to the fact that Zoetis Inc (NYSE:ZTS) has witnessed falling interest from the smart money, it’s safe to say that there lies a certain “tier” of hedge funds that slashed their entire stakes in the third quarter. Intriguingly, Ryan Caldwell’s Chiron Investment Management sold off the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $19 million in stock, and Andrew Weiss’s Weiss Asset Management was right behind this move, as the fund sold off about $3.3 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Zoetis Inc (NYSE:ZTS) but similarly valued. These stocks are BP plc (NYSE:BP), Snowflake Inc (NYSE:SNOW), Anthem Inc (NYSE:ANTM), ConocoPhillips (NYSE:COP), Analog Devices, Inc. (NASDAQ:ADI), U.S. Bancorp (NYSE:USB), and Gilead Sciences, Inc. (NASDAQ:GILD). This group of stocks’ market caps are closest to ZTS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BP | 29 | 1053236 | -1 |
| SNOW | 73 | 14569929 | 3 |
| ANTM | 59 | 4585560 | -8 |
| COP | 49 | 1371142 | -1 |
| ADI | 74 | 5698767 | 12 |
| USB | 42 | 8390873 | 1 |
| GILD | 55 | 1751615 | 1 |
| Average | 54.4 | 5345875 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.4 hedge funds with bullish positions and the average amount invested in these stocks was $5346 million. That figure was $2713 million in ZTS’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 29 bullish hedge fund positions. Zoetis Inc (NYSE:ZTS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZTS is 65.7. 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 ZTS as the stock returned 3% 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.
Follow Zoetis Inc. (NYSE:ZTS)
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Disclosure: None. This article was originally published at Insider Monkey.
