Is Edgewell Personal Care Company (EPC) Going to Burn These Hedge Funds?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Edgewell Personal Care Company (NYSE:EPC) to find out whether there were any major changes in hedge funds’ views.

Hedge fund interest in Edgewell Personal Care Company (NYSE:EPC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EPC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare EPC to other stocks including Velodyne Lidar, Inc. (NASDAQ:VLDR), FinVolution Group (NYSE:FINV), and Trustmark Corp (NASDAQ:TRMK) to get a better sense of its popularity.

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Alexander Roepers of Atlantic Investment Management

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

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in EPC a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

The largest stake in Edgewell Personal Care Company (NYSE:EPC) was held by GAMCO Investors, which reported holding $76.3 million worth of stock at the end of December. It was followed by Atlantic Investment Management with a $36.5 million position. Other investors bullish on the company included Arrowstreet Capital, Woodline Partners, and Clearline Capital. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to Edgewell Personal Care Company (NYSE:EPC), around 11.3% of its 13F portfolio. Kehrs Ridge Capital is also relatively very bullish on the stock, dishing out 2.58 percent of its 13F equity portfolio to EPC.

Since Edgewell Personal Care Company (NYSE:EPC) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds that decided to sell off their positions entirely heading into Q2. At the top of the heap, Steven Boyd’s Armistice Capital dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $11.6 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund dumped about $0.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Edgewell Personal Care Company (NYSE:EPC). These stocks are Velodyne Lidar, Inc. (NASDAQ:VLDR), FinVolution Group (NYSE:FINV), Trustmark Corp (NASDAQ:TRMK), Nano Dimension Ltd. (NASDAQ:NNDM), Kadant Inc. (NYSE:KAI), Meritor Inc (NYSE:MTOR), and Abercrombie & Fitch Co. (NYSE:ANF). All of these stocks’ market caps resemble EPC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VLDR 15 43509 -1
FINV 11 14660 3
TRMK 7 16486 -6
NNDM 11 203146 5
KAI 9 108092 2
MTOR 21 141115 5
ANF 20 412531 -8
Average 13.4 134220 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $134 million. That figure was $235 million in EPC’s case. Meritor Inc (NYSE:MTOR) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 7 bullish hedge fund positions. Edgewell Personal Care Company (NYSE:EPC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EPC is 67.6. 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 positive signal but 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately EPC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EPC were disappointed as the stock returned 3% since the end of March (through 7/16) 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 many of these stocks already outperformed the market since 2019.

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