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In this article we will analyze whether Albemarle Corporation (NYSE:ALB) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Albemarle Corporation (NYSE:ALB) a good stock to buy? Prominent investors were taking a bearish view. The number of long hedge fund bets were cut by 3 in recent months. Albemarle Corporation (NYSE:ALB) was in 28 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that ALB isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 31 hedge funds in our database with ALB holdings at the end of March.
According to most shareholders, hedge funds are viewed as underperforming, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, Our experts choose to focus on the moguls of this group, approximately 850 funds. These investment experts handle the majority of the smart money's total capital, and by tracking their finest investments, Insider Monkey has figured out various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Matthew Hulsizer of PEAK6 Capital
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Do Hedge Funds Think ALB Is A Good Stock To Buy Now?
At Q2's end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in ALB a year ago. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Albemarle Corporation (NYSE:ALB) was held by Renaissance Technologies, which reported holding $30.8 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $29.6 million position. Other investors bullish on the company included Bridgewater Associates, Baymount Management, and PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Axel Capital Management allocated the biggest weight to Albemarle Corporation (NYSE:ALB), around 6.17% of its 13F portfolio. Quaero Capital is also relatively very bullish on the stock, designating 4.14 percent of its 13F equity portfolio to ALB.
Due to the fact that Albemarle Corporation (NYSE:ALB) has faced a decline in interest from the aggregate hedge fund industry, it's easy to see that there was a specific group of funds who were dropping their full holdings by the end of the second quarter. It's worth mentioning that Chuck Royce's Royce & Associates cut the largest investment of the 750 funds followed by Insider Monkey, totaling about $6.5 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $5.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Albemarle Corporation (NYSE:ALB) but similarly valued. We will take a look at Tradeweb Markets Inc. (NASDAQ:TW), Qualtrics International Inc. (NASDAQ:XM), Ubiquiti Inc. (NYSE:UI), Citizens Financial Group Inc (NYSE:CFG), Restaurant Brands International Inc (NYSE:QSR), The Cooper Companies, Inc. (NYSE:COO), and Essex Property Trust Inc (NYSE:ESS). All of these stocks' market caps resemble ALB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TW,15,164110,-11 XM,37,2430220,0 UI,23,285947,4 CFG,36,402274,-5 QSR,22,2007862,-4 COO,33,1150171,-10 ESS,21,281090,-9 Average,26.7,960239,-5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $960 million. That figure was $165 million in ALB's case. Qualtrics International Inc. (NASDAQ:XM) is the most popular stock in this table. On the other hand Tradeweb Markets Inc. (NASDAQ:TW) is the least popular one with only 15 bullish hedge fund positions. Albemarle Corporation (NYSE:ALB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALB is 52.5. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on ALB as the stock returned 36% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.