The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards Coty Inc (NYSE:COTY).
Is Coty Inc (NYSE:COTY) an exceptional investment today? The smart money was getting more bullish. The number of long hedge fund positions went up by 5 in recent months. Coty Inc (NYSE:COTY) was in 30 hedge funds’ portfolios at the end of June. The all time high for this statistic is 46. Our calculations also showed that COTY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Brad Farber of Atika Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a look at the recent hedge fund action regarding Coty Inc (NYSE:COTY).
Do Hedge Funds Think COTY Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in COTY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Gabriel Plotkin’s Melvin Capital Management has the most valuable position in Coty Inc (NYSE:COTY), worth close to $93.4 million, corresponding to 0.5% of its total 13F portfolio. On Melvin Capital Management’s heels is Prentice Capital Management, led by Michael Zimmerman, holding a $59.9 million position; the fund has 14.3% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Renaissance Technologies and Stephen Mildenhall’s Contrarius Investment Management. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to Coty Inc (NYSE:COTY), around 14.3% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, earmarking 4.89 percent of its 13F equity portfolio to COTY.
As aggregate interest increased, key money managers were leading the bulls’ herd. Candlestick Capital Management, managed by Jack Woodruff, established the largest position in Coty Inc (NYSE:COTY). Candlestick Capital Management had $26.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $9.8 million investment in the stock during the quarter. The other funds with brand new COTY positions are David MacKnight’s One Fin Capital Management, Brad Farber’s Atika Capital, and Elise Di Vincenzo Crumbine’s Stormborn Capital Management.
Let’s now review hedge fund activity in other stocks similar to Coty Inc (NYSE:COTY). These stocks are Tenet Healthcare Corp (NYSE:THC), STAAR Surgical Company (NASDAQ:STAA), Euronet Worldwide, Inc. (NASDAQ:EEFT), Change Healthcare Inc. (NASDAQ:CHNG), Nikola Corporation (NASDAQ:NKLA), Toll Brothers Inc (NYSE:TOL), and Cullen/Frost Bankers, Inc. (NYSE:CFR). This group of stocks’ market caps are closest to COTY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| THC | 39 | 1860668 | 0 |
| STAA | 26 | 1637023 | 10 |
| EEFT | 40 | 368945 | 0 |
| CHNG | 51 | 1839614 | -5 |
| NKLA | 12 | 389494 | -7 |
| TOL | 32 | 800434 | 2 |
| CFR | 13 | 32297 | 2 |
| Average | 30.4 | 989782 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $990 million. That figure was $382 million in COTY’s case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Nikola Corporation (NASDAQ:NKLA) is the least popular one with only 12 bullish hedge fund positions. Coty Inc (NYSE:COTY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for COTY is 52.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately COTY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); COTY investors were disappointed as the stock returned -16.2% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Coty Inc. (NYSE:COTY)
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Disclosure: None. This article was originally published at Insider Monkey.
