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Do Hedge Funds Love Sherwin-Williams Co (SHW)?

Does Sherwin-Williams Co (NYSE:SHW) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

Sherwin-Williams Co (NYSE:SHW) was in 50 hedge funds’ portfolios at the end of the third quarter of 2016. SHW investors should pay attention to an increase in hedge fund interest of late. There were 45 hedge funds in our database with SHW holdings at the end of the previous quarter. 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 LIBERTY GLOBAL PLC (NASDAQ:LBTYK), Manulife Financial Corporation (USA) (NYSE:MFC), and Equinix Inc (NASDAQ:EQIX) to gather more data points.

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Now, let’s take a look at the new action surrounding Sherwin-Williams Co (NYSE:SHW).

Hedge fund activity in Sherwin-Williams Co (NYSE:SHW)

At Q3’s end, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

shw

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Dan Loeb’s Third Point has the most valuable position in Sherwin-Williams Co (NYSE:SHW), worth close to $242.1 million, amounting to 2.1% of its total 13F portfolio. Sitting at the No. 2 spot is Eric Mindich of Eton Park Capital, with a $220.1 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of James Crichton’s Hitchwood Capital Management, Robert Joseph Caruso’s Select Equity Group and Richard Chilton’s Chilton Investment Company.

As industrywide interest jumped, key money managers were breaking ground themselves. Point State Capital, managed by Zach Schreiber, assembled the largest position in Sherwin-Williams Co (NYSE:SHW). Point State Capital had $81.1 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also made a $41.5 million investment in the stock during the quarter. The other funds with brand new SHW positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Jonathan Barrett and Paul Segal’s Luminus Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Sherwin-Williams Co (NYSE:SHW). We will take a look at LIBERTY GLOBAL PLC (NASDAQ:LBTYK), Manulife Financial Corporation (USA) (NYSE:MFC), Equinix Inc (NASDAQ:EQIX), and eBay Inc (NASDAQ:EBAY). This group of stocks’ market valuations are closest to SHW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LBTYK 56 5713173 -4
MFC 13 197047 -3
EQIX 42 2131549 1
EBAY 53 3708761 -5

As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $2.93 billion. That figure was $2.23 billion in SHW’s case. LIBERTY GLOBAL PLC (NASDAQ:LBTYK) is the most popular stock in this table. On the other hand Manulife Financial Corporation (USA) (NYSE:MFC) is the least popular one with only 13 bullish hedge fund positions. Sherwin-Williams Co (NYSE:SHW) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LBTYK might be a better candidate to consider a long position.

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