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Hedge Funds Aren’t Crazy About Kimberly Clark Corporation (KMB) Anymore

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. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Kimberly Clark Corporation (NYSE:KMB) and determine whether the smart money was really smart about this stock.

Kimberly Clark Corporation (NYSE:KMB) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistics is 46. KMB investors should pay attention to a decrease in hedge fund interest of late. There were 46 hedge funds in our database with KMB holdings at the end of March. Our calculations also showed that KMB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Mario Gabelli of GAMCO Investors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a look at the new hedge fund action regarding Kimberly Clark Corporation (NYSE:KMB).

What does smart money think about Kimberly Clark Corporation (NYSE:KMB)?

At Q2’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KMB over the last 20 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

The largest stake in Kimberly Clark Corporation (NYSE:KMB) was held by AQR Capital Management, which reported holding $282.6 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $264.6 million position. Other investors bullish on the company included Holocene Advisors, D E Shaw, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Diamond Hill Capital allocated the biggest weight to Kimberly Clark Corporation (NYSE:KMB), around 1.56% of its 13F portfolio. Holocene Advisors is also relatively very bullish on the stock, earmarking 1.08 percent of its 13F equity portfolio to KMB.

Since Kimberly Clark Corporation (NYSE:KMB) has faced falling interest from hedge fund managers, it’s safe to say that there is a sect of money managers who sold off their full holdings last quarter. At the top of the heap, Michael Hintze’s CQS Cayman LP cut the largest position of the 750 funds followed by Insider Monkey, totaling close to $16.9 million in stock. Steven Boyd’s fund, Armistice Capital, also sold off its stock, about $11.3 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 9 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Kimberly Clark Corporation (NYSE:KMB) but similarly valued. These stocks are ABB Ltd (NYSE:ABB), Spotify Technology S.A. (NYSE:SPOT), Dollar General Corp. (NYSE:DG), Barrick Gold Corporation (NYSE:GOLD), Equinor ASA (NYSE:EQNR), Lam Research Corporation (NASDAQ:LRCX), and The Progressive Corporation (NYSE:PGR). This group of stocks’ market caps are closest to KMB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ABB 10 346451 0
SPOT 36 1882209 -4
DG 67 2296237 7
GOLD 52 3360658 -2
EQNR 10 237155 -1
LRCX 62 2537918 8
PGR 50 1147531 -1
Average 41 1686880 1

View table here if you experience formatting issues.

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 $1687 million. That figure was $1174 million in KMB’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand ABB Ltd (NYSE:ABB) is the least popular one with only 10 bullish hedge fund positions. Kimberly Clark Corporation (NYSE:KMB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KMB is 43.8. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately KMB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); KMB investors were disappointed as the stock returned 11.6% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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