As of the end of the September quarter, David S. Winter And David J. Millstone’s 40 North Management owns 9,865,008 share of Grace, worth $397.5 million. Overall, 39 hedge funds tracked by Insider Monkey had positions in W.R. Grace entering the fourth quarter.
4. Dow Inc (NYSE: DOW)
Michigan-based Dow ranks 4th on the list of 10 best chemical stocks to buy for 2021. The company, which has a market cap of over $41 billion, was given a strong rating by J.P. Morgan on the back of strong growth prospects in the polyethylene market. The firm upgraded Dow stock to Overweight from Neutral, and upped its price target to $60 from $47.
The stock has gained over 15% in the last 3 months.
Smart money loaded up on Dow stock in the third quarter, as 42 hedge funds in our database ended the period with Dow shares in their portfolios, up from 35 funds a quarter earlier. The total value of these stakes is $512.4 million. Here is what Evermore Global said about DOW and DD in its 2020 Q1 investor letter:
“With respect to Corteva, Dow and DuPont, COVID-19 related shutdowns that started in China painted an ominous picture for the global macro landscape, and we exited our positions in these three companies that comprised the former DowDupont (DWDP) beginning in February. Additionally, numerous channel checks we performed indicated that various supply chains were being disrupted and stressed, a poor sign for three companies that are very global in nature.
In retrospect, we remain generally happy with managements execution of many of the fundamental tenets of our original investment thesis in DWDP – the separations and spins were completed on time, the restructuring programs were well executed, and capital allocation across the three companies is much more streamlined and shareholder friendly today than in the past. Unfortunately, big picture issues that started with the U.S. – China trade war and remain today with the global collapse in macroeconomic activity has severely impacted each of the former DWDP companies. We will continue to remain close to each company and could reenter on or more of the aforementioned positions should an opportunity present itself.”
3. Chevron Corporation (NYSE: CVX)’s Chemical Business
Chevron Phillips Chemical Company is a chemicals company jointly owned by oil giant Chevron and Texas-based Phillips 66. In 2019, it was reported that Chevron Phillips was planning to acquire Canadian chemical company Nova Chemicals for about $15 billion. However, the deal could not materialize.
Chevron Phillips is a major producer of key chemicals like ethylene, propylene, polyethylene, Alpha-olefins, Polyalphaolefins and other specialty chemicals.
Ken Fisher’s Fisher Asset Management is one of the 43 hedge funds having stakes in Chevron, as of the end of the third quarter. The fund owns 5,428,944 shares of the company, worth $390.88 million. Here is what we wrote about CVX recently:
“2021 looks to be shaping up as a year where there will be steady progress against the pandemic and I think it will end much better than it begins.” Mike Wirth, the current Chairman, and CEO of Chevron seem to have a positive outlook for energy demand in the current year. In an interview with Bloomberg, Wirth said the pandemic made everyone stay in their places, travel restrictions are everywhere and so there has been little to almost no demand for oil but he views 2021 with full optimism. With the vaccine being just around the corner, he thinks that people will start to move around and this will result in a gradual increase in demand for oil and energy.
…Chevron (NYSE:CVX) recently acquired Noble Energy (NASDAQ: NBL) and for Wirth, “Together, we’re better than before.”. Noble Energy is also a very strong energy company that operates offshore Israel, the west coast of Africa, and onshore in top basins covering the U.S. of America. The recent acquisition aims to make the company stronger to attract more investors and to bring more investments in the company.”
2. Exxon Mobil Corporation (NYSE: XOM)
ExxonMobil Chemical Company is a chemicals division of the oil giant Exxon. The company makes a diverse range of chemical products that are used in packaging materials, plastics, cars, rubbers, and many other consumer goods. ExxonMobil’s chemicals business is currently under pressure amid trade tensions with China and a global supply glut. The company has a 9% share in the global production capacity of polyethylene but the segment is facing declines amid overproduction. However, with a giant like Exxon on its back, the division is expected to overcome the temporary difficulties in 2021. Goldman Sachs recently upped its price target for Exxon to Buy from Neutral, and also increased its price target to $52 from $42.
Out of the 816 elite hedge funds tracked by Insider Monkey, 52 ended the third quarter with positions in ExxonMobil. The total worth of these stakes is $1.38 billion. Here is what First Eagle said about XOM in its 2020 Q3 investor letter:
“The stock of Exxon Mobil continued to struggle in the third quarter, and it lost roughly half its market cap year to date. Despite this, we believed Exxon Mobil was well-equipped to contend with lower prices and remained a compelling investment. The company demonstrated high levels of operational flexibility during the difficult market environment and maintained an upward drift in earnings power. Its high-quality, long-duration assets occupy attractive positions on the cost curve.”
1. DuPont de Nemours Inc (NYSE: DD)
DuPont de Nemours Inc (NYSE: DD) is a chemicals behemoth that was formed as a result of a merger between Dow Chemical and E. I. du Pont de Nemours and Company in 2017. In November 2020, Bank of America gave a bullish rating to DuPont along with some other materials stocks on the back of an improving long-term outlook. The company in October posted better-than-expected Q3 earnings and a strong guidance. DuPont expects its full-year EPS to come in the range of $3.17-$3.21 versus the consensus estimate of $3.03. Revenue in the period is expected at $20.1 billion -$20.2 billion, while analysts are projecting a revenue of $20.18 billion.
DuPont tops the list of 10 best chemical stocks to buy for 2021 as 61 hedge funds tracked by Insider Monkey held stakes in the company as of the end of the third quarter. Here is what Rhizome Partners said:
“Three out of four DuPont segments reported EBITDA margins of 27‐31%. The remaining segment suffered an 86% decline in EBITDA due to its exposure to auto and industrials. In aggregate, DuPont’s Q2 EBITDA declined by 14% versus the same quarter in 2019. This is a testament to DuPont’s portfolio of specialty products that can command pricing power even during the worst of the times.”
Please also see 15 Largest Chemical Companies In The World and 10 Best Growth Stocks To Buy Now.
Disclosure: None.
