Is The Valspar Corporation (NYSE:VAL) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
The Valspar Corporation shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as HD Supply Holdings Inc (NASDAQ:HDS), Carlisle Companies, Inc. (NYSE:CSL), and Marine Harvest ASA (NYSE:MHG) to gather more data points.
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With all of this in mind, let’s go over the fresh action encompassing The Valspar Corporation (NYSE:VAL).
How are hedge funds trading The Valspar Corporation (NYSE:VAL)?
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the biggest position in The Valspar Corporation (NYSE:VAL). Iridian Asset Management has a $330.1 million position in the stock, comprising 2.8% of its 13F portfolio. The second most bullish fund manager is Mark Wolfson and Jamie Alexander of Jasper Ridge Partners, with a $52.8 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Other professional money managers that are bullish contain Steve Cohen’s Point72 Asset Management, D. E. Shaw’s D E Shaw and Jonathan Barrett and Paul Segal’s Luminus Management.
Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth about $10 million in call options, and Bart Baum’s Ionic Capital Management was right behind this move, as the fund dumped about $3.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Valspar Corporation (NYSE:VAL) but similarly valued. These stocks are HD Supply Holdings Inc (NASDAQ:HDS), Carlisle Companies, Inc. (NYSE:CSL), Marine Harvest ASA (NYSE:MHG), and Leggett & Platt, Inc. (NYSE:LEG). All of these stocks’ market caps are similar to VAL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HDS | 54 | 1273545 | 14 |
| CSL | 23 | 172800 | 0 |
| MHG | 4 | 7008 | 0 |
| LEG | 23 | 133339 | 11 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $397 million. That figure was $531 million in VAL’s case. HD Supply Holdings Inc (NASDAQ:HDS) is the most popular stock in this table. On the other hand Marine Harvest ASA (NYSE:MHG) is the least popular one with only 4 bullish hedge fund positions. The Valspar Corporation (NYSE:VAL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HDS might be a better candidate to consider a long position.
