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Before we spend days researching a stock idea we'd like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about Stanley Black & Decker, Inc. (NYSE:SWK).
Stanley Black & Decker, Inc. (NYSE:SWK) has experienced an increase in activity from the world's largest hedge funds lately. Our calculations also showed that SWK isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a look at the latest hedge fund action regarding Stanley Black & Decker, Inc. (NYSE:SWK).
How have hedgies been trading Stanley Black & Decker, Inc. (NYSE:SWK)?
At the end of the fourth quarter, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SWK over the last 14 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Stanley Black & Decker, Inc. (NYSE:SWK), which was worth $249 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $148 million worth of shares. Moreover, Ariel Investments, Theleme Partners, and Interval Partners were also bullish on Stanley Black & Decker, Inc. (NYSE:SWK), allocating a large percentage of their portfolios to this stock.