The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards PolyOne Corporation (NYSE:POL).
Is PolyOne Corporation (NYSE:POL) the right pick for your portfolio? Prominent investors are taking a bearish view. The number of long hedge fund bets shrunk by 5 in recent months. Our calculations also showed that POL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). POL was in 19 hedge funds' portfolios at the end of September. There were 24 hedge funds in our database with POL holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_365194" align="aligncenter" width="450"] David E. Shaw of D.E. Shaw[/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. Let's analyze the key hedge fund action regarding PolyOne Corporation (NYSE:POL).
Hedge fund activity in PolyOne Corporation (NYSE:POL)
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the second quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in POL a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in PolyOne Corporation (NYSE:POL), which was worth $31.8 million at the end of the third quarter. On the second spot was D E Shaw which amassed $26.3 million worth of shares. Renaissance Technologies, Millennium Management, and Winton Capital Management 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 Barington Capital Group allocated the biggest weight to PolyOne Corporation (NYSE:POL), around 7.96% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, designating 0.4 percent of its 13F equity portfolio to POL.
Because PolyOne Corporation (NYSE:POL) has faced declining sentiment from the smart money, it's safe to say that there were a few hedgies that slashed their entire stakes last quarter. Intriguingly, Nick Niell's Arrowgrass Capital Partners dropped the largest investment of the 750 funds tracked by Insider Monkey, comprising close to $3.1 million in stock, and Minhua Zhang's Weld Capital Management was right behind this move, as the fund sold off about $1.9 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 5 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as PolyOne Corporation (NYSE:POL) but similarly valued. We will take a look at Kosmos Energy Ltd (NYSE:KOS), Golub Capital BDC Inc (NASDAQ:GBDC), Triton International Limited (NYSE:TRTN), and Taubman Centers, Inc. (NYSE:TCO). All of these stocks' market caps match POL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KOS,24,154461,0 GBDC,11,47351,3 TRTN,14,50512,0 TCO,21,136881,-4 Average,17.5,97301,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $176 million in POL's case. Kosmos Energy Ltd (NYSE:KOS) is the most popular stock in this table. On the other hand Golub Capital BDC Inc (NASDAQ:GBDC) is the least popular one with only 11 bullish hedge fund positions. PolyOne Corporation (NYSE:POL) 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 POL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on POL were disappointed as the stock returned -3.4% 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.