Colgate-Palmolive Company (NYSE:CL) is a stalwart in the hedge fund industry. Here’s the proof.
To the average investor, there are a multitude of indicators investors can use to watch stocks. Some of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the market by a significant margin (see just how much).
Equally as necessary, bullish insider trading activity is a second way to analyze the financial markets. There are a variety of stimuli for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this tactic if piggybackers know what to do (learn more here).
Furthermore, we’re going to analyze the newest info surrounding Colgate-Palmolive Company (NYSE:CL).
How are hedge funds trading Colgate-Palmolive Company (NYSE:CL)?
Heading into Q3, a total of 29 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially.
According to our 13F database, Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, holds the most valuable position in Colgate-Palmolive Company (NYSE:CL). Lansdowne Partners has a $465 million position in the stock, comprising 5.9% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $441.6 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Matt McLennan’s First Eagle Investment Management, William von Mueffling’s Cantillon Capital Management and Bill Miller’s Legg Mason Capital Management.
Because Colgate-Palmolive Company (NYSE:CL) has faced bearish sentiment from upper-tier hedge fund managers, logic holds that there exists a select few money managers who were dropping their entire stakes at the end of the second quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the largest investment of the “upper crust” of funds we track, valued at close to $11.4 million in stock. Brian Ashford-Russell and Tim Woolley’s fund, Polar Capital, also cut its stock, about $6.4 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Colgate-Palmolive Company (NYSE:CL)?
Bullish insider trading is at its handiest when the company in question has experienced transactions within the past six months. Over the last 180-day time frame, Colgate-Palmolive Company (NYSE:CL) has seen zero unique insiders buying, and 23 insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Colgate-Palmolive Company (NYSE:CL). These stocks are Energizer Holdings, Inc. (NYSE:ENR), Avon Products, Inc. (NYSE:AVP), The Procter & Gamble Company (NYSE:PG), Estee Lauder Companies Inc (NYSE:EL), and Kimberly Clark Corp (NYSE:KMB). This group of stocks are in the personal products industry and their market caps resemble CL’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Energizer Holdings, Inc. (NYSE:ENR)||22||0||7|
|Avon Products, Inc. (NYSE:AVP)||28||3||2|
|The Procter & Gamble Company (NYSE:PG)||60||0||6|
|Estee Lauder Companies Inc (NYSE:EL)||32||0||8|
|Kimberly Clark Corp (NYSE:KMB)||25||0||8|
Using the returns demonstrated by our studies, average investors should always track hedge fund and insider trading activity, and Colgate-Palmolive Company (NYSE:CL) applies perfectly to this mantra.