We can judge whether Huntsman Corporation (NYSE:HUN) 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 when we factor in known risk factors.
Is Huntsman Corporation (NYSE:HUN) a safe investment today? The smart money is in a bearish mood. The number of long hedge fund positions shrunk by 2 in recent months. Our calculations also showed that HUN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). HUN was in 28 hedge funds' portfolios at the end of the third quarter of 2019. There were 30 hedge funds in our database with HUN positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are dozens of indicators stock traders use to analyze stocks. A pair of the most useful indicators are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can trounce the broader indices by a very impressive margin (see the details here).
[caption id="attachment_672456" align="aligncenter" width="473"] Michael Hintze of CQS Cayman LP[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the latest hedge fund action regarding Huntsman Corporation (NYSE:HUN).
How have hedgies been trading Huntsman Corporation (NYSE:HUN)?
Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the second quarter of 2019. By comparison, 31 hedge funds held shares or bullish call options in HUN a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Two Sigma Advisors held the most valuable stake in Huntsman Corporation (NYSE:HUN), which was worth $65.4 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $55.5 million worth of shares. Point72 Asset Management, AQR Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Swift Run Capital Management allocated the biggest weight to Huntsman Corporation (NYSE:HUN), around 10.08% of its portfolio. Albar Capital is also relatively very bullish on the stock, setting aside 5.47 percent of its 13F equity portfolio to HUN.
Due to the fact that Huntsman Corporation (NYSE:HUN) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few hedge funds that elected to cut their full holdings last quarter. At the top of the heap, David Cohen and Harold Levy's Iridian Asset Management sold off the largest position of the 750 funds monitored by Insider Monkey, valued at an estimated $102.1 million in stock. Phill Gross and Robert Atchinson's fund, Adage Capital Management, also sold off its stock, about $6.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Huntsman Corporation (NYSE:HUN). We will take a look at SmileDirectClub, Inc. (NASDAQ:SDC), Primerica, Inc. (NYSE:PRI), Aluminum Corp. of China Limited (NYSE:ACH), and Parsley Energy Inc (NYSE:PE). All of these stocks' market caps are closest to HUN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SDC,28,287514,28 PRI,23,340762,-3 ACH,3,4206,-2 PE,44,778914,8 Average,24.5,352849,7.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $395 million in HUN's case. Parsley Energy Inc (NYSE:PE) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 3 bullish hedge fund positions. Huntsman Corporation (NYSE:HUN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately HUN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HUN were disappointed as the stock returned -2.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.