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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 30th, 2021. What do these smart investors think about Westlake Chemical Corporation (NYSE:WLK)?
Is Westlake Chemical Corporation (NYSE:WLK) going to take off soon? Prominent investors were getting more optimistic. The number of long hedge fund bets moved up by 9 in recent months. Westlake Chemical Corporation (NYSE:WLK) was in 35 hedge funds' portfolios at the end of June. The all time high for this statistic is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WLK isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 26 hedge funds in our database with WLK holdings at the end of March.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we're going to take a peek at the recent hedge fund action regarding Westlake Chemical Corporation (NYSE:WLK).
Do Hedge Funds Think WLK Is A Good Stock To Buy Now?
At the end of June, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in WLK a year ago. With hedgies' capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Westlake Chemical Corporation (NYSE:WLK), which was worth $61.2 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $42.7 million worth of shares. AQR Capital Management, Point72 Asset Management, and SIR 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 Jade Capital Advisors allocated the biggest weight to Westlake Chemical Corporation (NYSE:WLK), around 2.7% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, designating 2.02 percent of its 13F equity portfolio to WLK.
As aggregate interest increased, specific money managers have been driving this bullishness. Renaissance Technologies, established the most outsized position in Westlake Chemical Corporation (NYSE:WLK). Renaissance Technologies had $12.6 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $12.2 million investment in the stock during the quarter. The following funds were also among the new WLK investors: Robert Vincent McHugh's Jade Capital Advisors, Jinghua Yan's TwinBeech Capital, and Karim Abbadi and Edward McBride's Centiva Capital.
Let's go over hedge fund activity in other stocks similar to Westlake Chemical Corporation (NYSE:WLK). We will take a look at Booz Allen Hamilton Holding Corporation (NYSE:BAH), Bruker Corporation (NASDAQ:BRKR), RPM International Inc. (NYSE:RPM), Axovant Sciences Ltd (NYSE:AXON), Sunrun Inc (NASDAQ:RUN), Sprint Corporation (NYSE:S), and Pegasystems Inc. (NASDAQ:PEGA). All of these stocks' market caps resemble WLK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BAH,29,214976,0 BRKR,31,459507,9 RPM,22,91588,2 AXON,24,513588,-7 RUN,45,2517525,4 S,67,2062506,67 PEGA,27,2029409,-8 Average,35,1127014,9.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1127 million. That figure was $270 million in WLK's case. Sprint Corporation (NYSE:S) is the most popular stock in this table. On the other hand RPM International Inc. (NYSE:RPM) is the least popular one with only 22 bullish hedge fund positions. Westlake Chemical Corporation (NYSE:WLK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WLK is 54.4. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on WLK as the stock returned 10.9% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.