Should You Invest in Church and Dwight Co. (CHD)?

Published on May 28, 2021 at 12:51 pm by Jose Karlo Mari Tottoc in Hedge Fund Investor Letters, News

LRT Capital Management, an investment management firm, published its first-quarter 2021 investor letter – a copy of which can be downloaded here. A net return of +5.12%% was recorded by the LRT Economic Moat strategy for the Q1 of 2021, while the LRT Market Neutral strategy returned +2.4% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

LRT Capital Management, in its Q1 2021 investor letter, mentioned Church & Dwight Co., Inc. (NYSE: CHD), and shared their insights on the company. Church & Dwight Co., Inc. is an Ewing Township-based household products manufacturer that currently has a $20.9 billion market capitalization. Since the beginning of the year, CHD delivered a -2.20% return, while its 12-month gains are up by 15.22%. As of May 27, 2021, the stock closed at $85.31 per share.

Here is what LRT Capital Management has to say about Church & Dwight Co., Inc. in its Q1 2021 investor letter:

“Church & Dwight is another classic “defensive” company – it sells cleaning products (Arm & Hammer, OxiClean), toothache medication (Orajel), and condoms (Trojans). For those that fail to purchase Trojans, the company also offers pregnancy test kits (First Response). Joking aside, the company’s revenue has historically grown by GDP+ rates organically. Combined with thoughtful acquisitions, 10-year revenue growth has averaged +6.6%, which has translated to EPS growth of over +11% per year. The company has accomplished all this with ½ of the overall volatility of the stock market. The company reported Q4 2020 earnings on January 29th, beating both top (revenue +14% YoY) and bottom line measures (EPS $0.59 vs $0.51 expected). We view the shares as reasonably valued at 26x forward earnings given the high level of predictability of the company’s earnings and low financial leverage. Shares are down 0.5% year-to-date.”

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Our calculations show that Church & Dwight Co., Inc. (NYSE: CHD) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Church & Dwight Co., Inc. was in 27 hedge fund portfolios, compared to 38 funds in the fourth quarter of 2020. CHD delivered a 7.46% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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