Is Estee Lauder (EL) Stock A Buy or Sell?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of The Estee Lauder Companies Inc (NYSE:EL) based on that data.

Is Estee Lauder (EL) stock a buy or sell? The smart money was turning bullish. The number of long hedge fund positions inched up by 5 recently. The Estee Lauder Companies Inc (NYSE:EL) was in 51 hedge funds’ portfolios at the end of December. The all time high for this statistic is 50. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EL isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).


Dan Loeb of Third Point

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 (or at the end of this article). Now we’re going to take a glance at the latest hedge fund action regarding The Estee Lauder Companies Inc (NYSE:EL).

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

At the end of December, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. By comparison, 50 hedge funds held shares or bullish call options in EL a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in The Estee Lauder Companies Inc (NYSE:EL) was held by Fundsmith LLP, which reported holding $1806.6 million worth of stock at the end of December. It was followed by Ako Capital with a $419.2 million position. Other investors bullish on the company included AQR Capital Management, Suvretta Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Ariose Capital allocated the biggest weight to The Estee Lauder Companies Inc (NYSE:EL), around 12.73% of its 13F portfolio. Keywise Capital Management is also relatively very bullish on the stock, designating 9.23 percent of its 13F equity portfolio to EL.

As aggregate interest increased, key money managers were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, established the largest position in The Estee Lauder Companies Inc (NYSE:EL). Holocene Advisors had $75.5 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also made a $53.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Rockefeller and Karl Kroeker’s Woodline Partners, Kamyar Khajavi’s MIK Capital, and Yi Xin’s Ariose Capital.

Let’s go over hedge fund activity in other stocks similar to The Estee Lauder Companies Inc (NYSE:EL). These stocks are Intuitive Surgical, Inc. (NASDAQ:ISRG), General Electric Company (NYSE:GE), Rio Tinto Group (NYSE:RIO), Diageo plc (NYSE:DEO), GlaxoSmithKline plc (NYSE:GSK), Stryker Corporation (NYSE:SYK), and Booking Holdings Inc. (NASDAQ:BKNG). All of these stocks’ market caps match EL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ISRG 49 1802145 -1
GE 69 5684620 24
RIO 26 1711997 3
DEO 23 667041 4
GSK 30 1742036 -1
SYK 44 3222907 -4
BKNG 108 8247434 -5
Average 49.9 3296883 2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.9 hedge funds with bullish positions and the average amount invested in these stocks was $3297 million. That figure was $3593 million in EL’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 23 bullish hedge fund positions. The Estee Lauder Companies Inc (NYSE:EL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EL is 56.5. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on EL as the stock returned 7.3% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Estee Lauder Companies Inc (NYSE:EL)

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