Is McCormick & Company, Incorporated (NYSE:MKC) the right pick for your portfolio? The best stock pickers are becoming less hopeful. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience
If you’d ask most shareholders, hedge funds are viewed as unimportant, outdated investment tools of the past. While there are greater than 8000 funds in operation at present, we at Insider Monkey choose to focus on the elite of this club, around 450 funds. It is widely believed that this group has its hands on the lion’s share of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing stock picks, we have deciphered a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Just as important, optimistic insider trading sentiment is a second way to break down the marketplace. There are a number of incentives for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this tactic if piggybackers know what to do (learn more here).
With these “truths” under our belt, it’s important to take a look at the key action encompassing McCormick & Company, Incorporated (NYSE:MKC).
Hedge fund activity in McCormick & Company, Incorporated (NYSE:MKC)
Heading into Q2, a total of 13 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably.
Of the funds we track, David Harding’s Winton Capital Management had the most valuable position in McCormick & Company, Incorporated (NYSE:MKC), worth close to $49.6 million, accounting for 0.9% of its total 13F portfolio. On Winton Capital Management’s heels is John W. Rogers of Ariel Investments, with a $19.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Cliff Asness’s AQR Capital Management, Noam Gottesman’s GLG Partners and Tom Russo’s Gardner Russo & Gardner.
Due to the fact that McCormick & Company, Incorporated (NYSE:MKC) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few funds who were dropping their positions entirely heading into Q2. Intriguingly, Jim Simons’s Renaissance Technologies cut the largest investment of all the hedgies we watch, worth an estimated $8.6 million in stock.. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $7.7 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about McCormick & Company, Incorporated (NYSE:MKC)?
Insider buying is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last half-year time period, McCormick & Company, Incorporated (NYSE:MKC) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to McCormick & Company, Incorporated (NYSE:MKC). These stocks are ConAgra Foods, Inc. (NYSE:CAG), Campbell Soup Company (NYSE:CPB), Ingredion Inc (NYSE:INGR), The J.M. Smucker Company (NYSE:SJM), and Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR). This group of stocks belong to the processed & packaged goods industry and their market caps resemble MKC’s market cap.