In this article, we discuss 5 stocks that activist investors are buying. If you want our detailed analysis of these stocks, go directly to 10 Stocks Activist Investors are Buying.
5. Huntsman Corporation (NYSE:HUN)
Number of Hedge Fund Holders: 26
Huntsman Corporation (NYSE:HUN) is a Texas-based manufacturer of chemical products which are used primarily in industrial applications. Huntsman Corporation (NYSE:HUN) supplies its products to commercial customers including BMW, General Electric Company (NYSE:GE), Chevron Corporation (NYSE:CVX), The Procter & Gamble Company (NYSE:PG), Unilever PLC (NYSE:UL), and Walkaroo.
On January 14, Huntsman Corporation (NYSE:HUN) shares gained approximately 2% after Jeffrey Smith’s activist hedge fund, Starboard Value, nominated four directors for Huntsman Corporation (NYSE:HUN)’s board in order to “meaningfully” improve the operational efficiency and capital allocation at the company. Starboard Value disclosed an 8.6% ownership interest in Huntsman Corporation (NYSE:HUN) in September 2021, and stated that it might put forward different recommendations for improvement including potential business combinations and sale of assets. Jeffrey Smith himself would be on Huntsman Corporation (NYSE:HUN)’s board to oversee operational performance.
Deutsche Bank analyst David Begleiter on January 20 added Huntsman Corporation (NYSE:HUN) as a “Catalyst Call Buy”. With the company engaged in a proxy contest with Starboard Value ahead of the upcoming March 25 annual meeting, Huntsman Corporation (NYSE:HUN) will “pull out all stops” in delivering Q4 earnings and providing “strong” guidance at its earnings release on February 15, the analyst told investors in a research note. The analyst also expects Starboard to introduce a detailed plan in the coming weeks which outlines Huntsman Corporation (NYSE:HUN)’s earnings potential and a roadmap to get there. These “dueling plans/slide decks will be beneficial for the shares and investors”, according to the analyst.
In the third quarter of 2021, Yacktman Asset Management was one of the leading stakeholders of Huntsman Corporation (NYSE:HUN), with 6.6 million shares worth approximately $198 million. Overall, 26 hedge funds were bullish on the stock in the third quarter.
Here is what Madison Small Cap Fund has to say about Huntsman Corporation (NYSE:HUN) in their Q4 2020 investor letter:
“We have increased our exposure modestly to several industrial and materials names that we believe should benefit from the reopening of the economy in 2021. One such name is Huntsman Corporation (HUN); a company we have followed for more than 15 years and have never owned before. Huntsman Corporation is a global producer of organic chemicals. The company was founded by well-known businessperson and political figure, Jon Huntsman, in 1970 and has grown through its history into a diversified portfolio of chemical businesses Our interest in Huntsman coincides with the current through conditions in the global economy due to the Covid-19 recession. The company’s end markets are cyclical and demand for their products is highly price elastic. Additionally, the advanced materials business suffered due to the exposure to the aerospace original equipment manufacturer (OEM) down cycle. Despite these challenges, we believe management has executed well; no surprise, given their track record. We think Earnings before interest, taxes, and amortization (EBITDA) troughed in the second quarter and are heartened by the lack of further deterioration in 3Q and 4Q. Looking to the future, we see an intriguing reflation opportunity driven by the resumption of economic activity in late 2021. Further, we posit that the easy monetary policy, that has characterized this cycle, has inflationary side effects which would benefit a basic materials producer such as HUN. The company has also been moving downstream to more value-added businesses, which may drive EBITDA multiple expansion in the future.”
