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Hedge Funds Are Dumping Kimberly Clark Corporation (KMB)

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in October, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Kimberly Clark Corporation (NYSE:KMB) in this article.

Kimberly Clark Corporation (NYSE:KMB) was in 26 hedge funds’ portfolios at the end of September. KMB has seen a decrease in hedge fund interest lately. There were 27 hedge funds in our database with KMB holdings at the end of the previous quarter. Our calculations also showed that KMB isn’t among the 30 most popular stocks among hedge funds.

To most market participants, hedge funds are viewed as unimportant, old financial tools of yesteryear. While there are greater than 8,000 funds with their doors open today, Our experts choose to focus on the bigwigs of this club, approximately 700 funds. These hedge fund managers have their hands on most of the hedge fund industry’s total capital, and by watching their inimitable stock picks, Insider Monkey has determined many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by 6 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

John Overdeck of Two Sigma

Let’s take a look at the new hedge fund action surrounding Kimberly Clark Corporation (NYSE:KMB).

Hedge fund activity in Kimberly Clark Corporation (NYSE:KMB)

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KMB over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

KMB_dec2018

When looking at the institutional investors followed by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the largest position in Kimberly Clark Corporation (NYSE:KMB), worth close to $169.1 million, comprising 0.8% of its total 13F portfolio. The second largest stake is held by Panayotis Takis Sparaggis of Alkeon Capital Management, with a $113.6 million call position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Kimberly Clark Corporation (NYSE:KMB) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies that slashed their entire stakes heading into Q3. At the top of the heap, Jim Simons’s Renaissance Technologies dumped the biggest position of all the hedgies watched by Insider Monkey, worth about $40.6 million in call options. Noam Gottesman’s fund, GLG Partners, also dumped its call options, about $28.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks similar to Kimberly Clark Corporation (NYSE:KMB). We will take a look at The Royal Bank of Scotland Group plc (NYSE:RBS), Kinder Morgan Inc (NYSE:KMI), Waste Management, Inc. (NYSE:WM), and Barclays PLC (NYSE:BCS). This group of stocks’ market caps resemble KMB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RBS 6 32493 -3
KMI 50 1504171 10
WM 34 3428401 -2
BCS 11 584129 4
Average 25.25 1387299 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $139 billion. That figure was $567 million in KMB’s case. Kinder Morgan Inc (NYSE:KMI) is the most popular stock in this table. On the other hand The Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 6 bullish hedge fund positions. Kimberly Clark Corporation (NYSE:KMB) 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 KMI might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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