Should You Buy Estee Lauder Companies Inc (EL)?

As industrywide interest jumped, specific money managers have been driving this bullishness. Scopus Asset Management, run by Alexander Mitchell, established the most valuable position in Estee Lauder Companies Inc (NYSE:EL). The fund reportedly had $54 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $27.8 million investment in the stock during the quarter. The following funds were also among the new EL investors: Anand Parekh’s Alyeska Investment Group, Ken Griffin’s Citadel Investment Group, and Matthew Tewksbury’s Stevens Capital Management.

Let’s now review hedge fund activity in other stocks similar to Estee Lauder Companies Inc (NYSE:EL). These stocks are Emerson Electric Co. (NYSE:EMR), Charles Schwab Corp (NYSE:SCHW), Korea Electric Power Corporation (ADR) (NYSE:KEP), and Constellation Brands, Inc. (NYSE:STZ). All of these stocks’ market caps are similar to EL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EMR 28 411399 -4
SCHW 44 2680313 6
KEP 14 125755 1
STZ 67 6679779 -2

As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $2.47 billion. That figure was $741 million in EL’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (ADR) (NYSE:KEP) is the least popular one with only 14 bullish hedge fund positions. Estee Lauder Companies Inc (NYSE:EL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard STZ might be a better candidate to consider a long position.

Disclosure: none.