Braskem SA (ADR) (BAK): Insiders Aren’t Crazy About It

Braskem SA (ADR) (NYSE:BAK) was in 5 hedge funds’ portfolio at the end of March. BAK investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 7 hedge funds in our database with BAK holdings at the end of the previous quarter.

In the eyes of most market participants, hedge funds are seen as unimportant, outdated financial tools of years past. While there are more than 8000 funds trading today, we hone in on the leaders of this club, around 450 funds. Most estimates calculate that this group oversees most of the smart money’s total asset base, and by watching their best stock picks, we have revealed a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as integral, bullish insider trading activity is another way to parse down the investments you’re interested in. There are lots of motivations for an upper level exec to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).

With these “truths” under our belt, we’re going to take a peek at the recent action encompassing Braskem SA (ADR) (NYSE:BAK).

What does the smart money think about Braskem SA (ADR) (NYSE:BAK)?

Heading into Q2, a total of 5 of the hedge funds we track were bullish in this stock, a change of -29% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in Braskem SA (ADR) (NYSE:BAK), worth close to $2.4 million, accounting for less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Millennium Management, managed by Israel Englander, which held a $0.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Matthew Hulsizer’s PEAK6 Capital Management, Cliff Asness’s AQR Capital Management and Matthew Tewksbury’s Stevens Capital Management.

Because Braskem SA (ADR) (NYSE:BAK) has experienced declining sentiment from hedge fund managers, we can see that there exists a select few funds who sold off their full holdings in Q1. At the top of the heap, Ken Griffin’s Citadel Investment Group said goodbye to the biggest stake of the “upper crust” of funds we monitor, worth close to $1 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund said goodbye to about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in Q1.

How have insiders been trading Braskem SA (ADR) (NYSE:BAK)?

Bullish insider trading is best served when the primary stock in question has seen transactions within the past half-year. Over the last six-month time period, Braskem SA (ADR) (NYSE:BAK) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Braskem SA (ADR) (NYSE:BAK). These stocks are FMC Corp (NYSE:FMC), Celanese Corporation (NYSE:CE), Huntsman Corporation (NYSE:HUN), and Ashland Inc. (NYSE:ASH). All of these stocks are in the chemicals – major diversified industry and their market caps match BAK’s market cap.