We started seeing tectonic shifts in the market during the third quarter. Small-cap stocks underperformed the large-cap stocks by more than 10 percentage points between the end of June 2015 and the end of June 2016. A mean reversion in trends bumped small-cap stocks’ return to almost 9% in Q3, outperforming their large-cap peers by 6 percentage points. The momentum in small-cap space hasn’t subsided during this quarter either. Small-cap stocks beat large-cap stocks by another 4 percentage points during the first 7 weeks of this quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were boosting their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards The Home Depot, Inc. (NYSE:HD).
Home Depot, Inc. (NYSE:HD) was in 72 hedge funds’ portfolios at the end of the third quarter of 2016. HD investors should pay attention to an increase in hedge fund interest lately. There were 67 hedge funds in our database with HD holdings at the end of the previous quarter. At the end of this article we will also compare HD to other stocks including The Walt Disney Company (NYSE:DIS), Comcast Corporation (NASDAQ:CMCSA), and Philip Morris International Inc. (NYSE:PM) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s take a glance at the latest action regarding The Home Depot, Inc. (NYSE:HD).
How are hedge funds trading The Home Depot, Inc. (NYSE:HD)?
At the end of the third quarter, a total of 72 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in The Home Depot, Inc. (NYSE:HD), worth close to $1.09 billion, comprising 1.9% of its total 13F portfolio. The second largest stake is held by Two Creeks Capital Management, led by Ryan Pedlow, holding a $262.8 million position; 16.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism encompass D. E. Shaw’s D E Shaw, Jim Simons’ Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.