Is Stanley Black & Decker, Inc. (SWK) Going to Burn These Hedge Funds?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Stanley Black & Decker, Inc. (NYSE:SWK).

Stanley Black & Decker, Inc. (NYSE:SWK) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. Stanley Black & Decker, Inc. (NYSE:SWK) was in 37 hedge funds’ portfolios at the end of September. The all time high for this statistic is 44. There were 44 hedge funds in our database with SWK positions at the end of the second quarter. Our calculations also showed that SWK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s review the fresh hedge fund action regarding Stanley Black & Decker, Inc. (NYSE:SWK).


Paul Tudor Jones of Tudor Investment Corp

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

At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards SWK over the last 25 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

The largest stake in Stanley Black & Decker, Inc. (NYSE:SWK) was held by Pzena Investment Management, which reported holding $177.5 million worth of stock at the end of September. It was followed by D E Shaw with a $105.9 million position. Other investors bullish on the company included AQR Capital Management, GLG Partners, and Sculptor Capital. In terms of the portfolio weights assigned to each position Columbus Point allocated the biggest weight to Stanley Black & Decker, Inc. (NYSE:SWK), around 4.57% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, designating 0.7 percent of its 13F equity portfolio to SWK.

Due to the fact that Stanley Black & Decker, Inc. (NYSE:SWK) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of money managers who were dropping their full holdings last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest investment of all the hedgies monitored by Insider Monkey, worth about $21.3 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dropped about $15.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 7 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Stanley Black & Decker, Inc. (NYSE:SWK). These stocks are Chewy, Inc. (NYSE:CHWY), United Microelectronics Corp (NYSE:UMC), Eversource Energy (NYSE:ES), Las Vegas Sands Corp. (NYSE:LVS), Yandex NV (NASDAQ:YNDX), Synchrony Financial (NYSE:SYF), and WEC Energy Group, Inc. (NYSE:WEC). This group of stocks’ market caps are similar to SWK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHWY 32 376172 -11
UMC 13 151038 3
ES 21 137293 -5
LVS 40 938057 -8
YNDX 27 1432186 -4
SYF 35 1376950 -4
WEC 31 432498 4
Average 28.4 692028 -3.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $692 million. That figure was $776 million in SWK’s case. Las Vegas Sands Corp. (NYSE:LVS) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) is the least popular one with only 13 bullish hedge fund positions. Stanley Black & Decker, Inc. (NYSE:SWK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SWK is 67.7. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately SWK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SWK were disappointed as the stock returned 0.1% since the end of September (through 11/30) 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.