10 Worst Specialty Chemical Stocks to Buy According to Short Sellers

3. Arcadium Lithium plc (NYSE:ALTM)

Number of Hedge Fund Holders: 19

Short % of Shares Outstanding: 8.03%

Arcadium Lithium plc (NYSE:ALTM) specializes in producing lithium chemicals and specialty products, serving markets globally. It offers battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high-purity lithium metal, which are critical for industries such as electric vehicles, electronics, pharmaceuticals, polymers, and aerospace applications.

In Q2 2024, Arcadium Lithium plc (NYSE:ALTM) posted revenue of $255 million, reflecting an 8% increase YoY, primarily driven by higher sales volumes of lithium hydroxide and carbonate, but partially offset by reduced spodumene sales due to production cuts at Mt. Cattlin. Butyllithium and Other Lithium Specialties segments also played a significant role, contributing to higher realized prices per lithium carbonate equivalent (LCE).

Despite market challenges, Arcadium Lithium plc (NYSE:ALTM) maintained a strong adjusted EBITDA of $99 million for the quarter, with a 39% margin, highlighting its low-cost operations and long-term customer contracts. Net income came in at $94.5 million, boosted by a favorable product mix and ongoing cost-saving initiatives.

The company’s liquidity remained strong in Q2, supported by operational cash flows and a strategic decision to slow down expansion projects, reducing capital spending by $500 million.

In August 2024, Arcadium Lithium plc (NYSE:ALTM) acquired Li-Metals, a lithium metal business, for $11 million to enhance its production capabilities by refining lithium metal from carbonate. The objective is to commercialize and improve the production process, making it safer, more sustainable, and cost-effective.

Arcadium saw a 6.65% dip in its share price over the past month and a 64.3% YTD decline due to falling lithium prices, reduced demand for spodumene, and an oversupply in the market. Additionally, the company’s decision to slow down expansion projects likely contributed to the short-term decline.

As of Q2 2024, 19 hedge funds, with a combined investment of $52.0 million, remain bullish on the stock, according to Insider Monkey’s database.