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How Did Olin Corporation (OLN) Compare Against Top Hedge Fund Stocks in 2019?

Asma UL Husna

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. What do these smart investors think about Olin Corporation (NYSE:OLN)?

Is Olin Corporation (NYSE:OLN) a healthy stock for your portfolio? The best stock pickers are turning bullish. The number of bullish hedge fund bets moved up by 4 in recent months. Our calculations also showed that OLN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings). OLN was in 27 hedge funds' portfolios at the end of September. There were 23 hedge funds in our database with OLN holdings at the end of the previous quarter.

In the financial world there are plenty of gauges stock traders can use to assess their stock investments. A couple of the best gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outperform the market by a superb margin (see the details here).

[caption id="attachment_735641" align="aligncenter" width="473"] Michael Lowenstein of Kensico Capital[/caption]

Michael Lowenstein Kensico Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind we're going to take a gander at the new hedge fund action surrounding Olin Corporation (NYSE:OLN).

Hedge fund activity in Olin Corporation (NYSE:OLN)

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OLN over the last 17 quarters. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Phill Gross and Robert Atchinson's Adage Capital Management has the biggest position in Olin Corporation (NYSE:OLN), worth close to $166.7 million, amounting to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Kensico Capital, led by Michael Lowenstein, holding a $139 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Steven Richman's RR Partners, Ed Bosek's BeaconLight Capital and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Proxima Capital Management allocated the biggest weight to Olin Corporation (NYSE:OLN), around 9.42% of its 13F portfolio. Soapstone Capital is also relatively very bullish on the stock, earmarking 7.9 percent of its 13F equity portfolio to OLN.

Consequently, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in Olin Corporation (NYSE:OLN). Millennium Management had $13.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $2.9 million position during the quarter. The following funds were also among the new OLN investors: Michael Gelband's ExodusPoint Capital, Cliff Asness's AQR Capital Management, and Paul Marshall and Ian Wace's Marshall Wace.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Olin Corporation (NYSE:OLN) but similarly valued. We will take a look at Agree Realty Corporation (NYSE:ADC), Alkermes Plc (NASDAQ:ALKS), Lithia Motors Inc (NYSE:LAD), and Grocery Outlet Holding Corp. (NASDAQ:GO). All of these stocks' market caps are closest to OLN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADC,9,113090,-2 ALKS,24,360734,1 LAD,24,628887,3 GO,15,63095,-6 Average,18,291452,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $490 million in OLN's case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand Agree Realty Corporation (NYSE:ADC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Olin Corporation (NYSE:OLN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately OLN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on OLN were disappointed as the stock returned -10.8% in 2019 and trailed 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 65 percent of these stocks outperformed the market in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Disclosure: None. This article was originally published at Insider Monkey.

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