Here is What Hedge Funds Think About The Clorox Company (CLX)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about The Clorox Company (NYSE:CLX) in this article.

Is The Clorox Company (NYSE:CLX) an excellent investment right now? Hedge funds were getting less bullish. The number of bullish hedge fund positions decreased by 1 recently. The Clorox Company (NYSE:CLX) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistic is 41. Our calculations also showed that CLX 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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Keeping this in mind let’s view the new hedge fund action encompassing The Clorox Company (NYSE:CLX).

Do Hedge Funds Think CLX Is A Good Stock To Buy Now?

At Q2’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CLX over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Cedar Rock Capital held the most valuable stake in The Clorox Company (NYSE:CLX), which was worth $306.3 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $192.1 million worth of shares. AQR Capital Management, Citadel Investment Group, and Candlestick Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cedar Rock Capital allocated the biggest weight to The Clorox Company (NYSE:CLX), around 6.97% of its 13F portfolio. Candlestick Capital Management is also relatively very bullish on the stock, dishing out 1.47 percent of its 13F equity portfolio to CLX.

Seeing as The Clorox Company (NYSE:CLX) has experienced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their entire stakes by the end of the second quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors dumped the largest position of all the hedgies monitored by Insider Monkey, comprising close to $26.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also sold off its stock, about $5.2 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to The Clorox Company (NYSE:CLX). We will take a look at Imperial Oil Limited (NYSE:IMO), Teradyne, Inc. (NASDAQ:TER), The Hartford Financial Services Group Inc (NYSE:HIG), DISH Network Corp. (NASDAQ:DISH), Qorvo Inc (NASDAQ:QRVO), Cheniere Energy, Inc. (NYSE:LNG), and Martin Marietta Materials, Inc. (NYSE:MLM). All of these stocks’ market caps resemble CLX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.4 hedge funds with bullish positions and the average amount invested in these stocks was $1862 million. That figure was $980 million in CLX’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSE:IMO) is the least popular one with only 15 bullish hedge fund positions. The Clorox Company (NYSE:CLX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CLX is 61.6. 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 21.8% in 2021 through October 11th and surpassed the market again by 4.4 percentage points. Unfortunately CLX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CLX investors were disappointed as the stock returned -9.3% since the end of June (through 10/11) 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.

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