How do we determine whether Quaker Chemical Corp (NYSE:KWR) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
To most investors, hedge funds are seen as slow, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our experts look at the bigwigs of this group, around 750 funds. These investment experts handle bulk of the smart money's total capital, and by paying attention to their matchless investments, Insider Monkey has formulated numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We're going to take a look at the new hedge fund action encompassing Quaker Chemical Corp (NYSE:KWR).
What does smart money think about Quaker Chemical Corp (NYSE:KWR)?
At Q1's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in KWR a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Quaker Chemical Corp (NYSE:KWR), which was worth $139.5 million at the end of the first quarter. On the second spot was Winton Capital Management which amassed $1.6 million worth of shares. Moreover, GAMCO Investors, Arrowstreet Capital, and D E Shaw were also bullish on Quaker Chemical Corp (NYSE:KWR), allocating a large percentage of their portfolios to this stock.
Due to the fact that Quaker Chemical Corp (NYSE:KWR) has witnessed falling interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of fund managers who sold off their positions entirely by the end of the third quarter. Interestingly, Jim Simons's Renaissance Technologies said goodbye to the largest investment of all the hedgies tracked by Insider Monkey, worth an estimated $5.4 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dumped about $1.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Quaker Chemical Corp (NYSE:KWR) but similarly valued. We will take a look at Avista Corp (NYSE:AVA), Vishay Intertechnology, Inc. (NYSE:VSH), Sprouts Farmers Market Inc (NASDAQ:SFM), and WNS (Holdings) Limited (NYSE:WNS). This group of stocks' market values resemble KWR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVA,18,176178,0 VSH,21,339355,2 SFM,21,253525,-1 WNS,15,196783,-1 Average,18.75,241460,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $145 million in KWR's case. Vishay Intertechnology, Inc. (NYSE:VSH) is the most popular stock in this table. On the other hand WNS (Holdings) Limited (NYSE:WNS) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Quaker Chemical Corp (NYSE:KWR) is even less popular than WNS. Hedge funds dodged a bullet by taking a bearish stance towards KWR. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately KWR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); KWR investors were disappointed as the stock returned 1% during the same time frame 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 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.