Church & Dwight Co., Inc. (CHD): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do? – Ecolab Inc. (ECL), Stepan Company (SCL)

Church & Dwight Co., Inc. (NYSE:CHD) was in 11 hedge funds’ portfolio at the end of December. CHD has experienced a decrease in hedge fund interest in recent months. There were 13 hedge funds in our database with CHD holdings at the end of the previous quarter.

To most stock holders, hedge funds are seen as underperforming, old financial tools of years past. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the upper echelon of this club, close to 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their best picks, we have unsheathed a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Equally as important, positive insider trading activity is a second way to break down the financial markets. Obviously, there are lots of motivations for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).

Now, let’s take a peek at the latest action encompassing Church & Dwight Co., Inc. (NYSE:CHD).

How have hedgies been trading Church & Dwight Co., Inc. (NYSE:CHD)?

Heading into 2013, a total of 11 of the hedge funds we track were bullish in this stock, a change of -15% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Mario Gabelli’s GAMCO Investors had the largest position in Church & Dwight Co., Inc. (NYSE:CHD), worth close to $23.3 million, comprising 0.2% of its total 13F portfolio. On GAMCO Investors’s heels is Cliff Asness of AQR Capital Management, with a $16.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and Mark Kingdon’s Kingdon Capital.

Judging by the fact that Church & Dwight Co., Inc. (NYSE:CHD) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that elected to cut their full holdings at the end of the year. It’s worth mentioning that Louis Navellier’s Navellier & Associates cut the largest investment of the “upper crust” of funds we watch, worth about $54.7 million in stock., and Malcolm Fairbairn of Ascend Capital was right behind this move, as the fund dropped about $7.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds at the end of the year.

What do corporate executives and insiders think about Church & Dwight Co., Inc. (NYSE:CHD)?

Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last six-month time period, Church & Dwight Co., Inc. (NYSE:CHD) has seen 1 unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Church & Dwight Co., Inc. (NYSE:CHD). These stocks are Ocean Bio-Chem, Inc. (NASDAQ:OBCI), Zep, Inc. (NYSE:ZEP), Stepan Company (NYSE:SCL), , and Ecolab Inc. (NYSE:ECL). This group of stocks are in the cleaning products industry and their market caps resemble CHD’s market cap.