Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about The Chemours Company (NYSE:CC).
The Chemours Company (NYSE:CC) has seen a decrease in hedge fund sentiment of late. The Chemours Company (NYSE:CC) was in 24 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that CC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
John Petry of Sessa Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a gander at the latest hedge fund action encompassing The Chemours Company (NYSE:CC).
Do Hedge Funds Think CC Is A Good Stock To Buy Now?
At Q2’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. By comparison, 35 hedge funds held shares or bullish call options in CC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Chemours Company (NYSE:CC) was held by Sessa Capital, which reported holding $308.9 million worth of stock at the end of June. It was followed by Greenlight Capital with a $81.1 million position. Other investors bullish on the company included Miller Value Partners, Two Sigma Advisors, and Brightline Capital. In terms of the portfolio weights assigned to each position Sessa Capital allocated the biggest weight to The Chemours Company (NYSE:CC), around 11.59% of its 13F portfolio. Brightline Capital is also relatively very bullish on the stock, designating 10.89 percent of its 13F equity portfolio to CC.
Since The Chemours Company (NYSE:CC) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies that slashed their full holdings last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest position of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $41.7 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $6.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Chemours Company (NYSE:CC) but similarly valued. These stocks are Elbit Systems Ltd. (NASDAQ:ESLT), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), Kornit Digital Ltd. (NASDAQ:KRNT), Duck Creek Technologies, Inc. (NASDAQ:DCT), nCino, Inc. (NASDAQ:NCNO), Vroom, Inc. (NASDAQ:VRM), and Exelixis, Inc. (NASDAQ:EXEL). This group of stocks’ market values match CC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESLT | 4 | 48909 | 1 |
| ADPT | 27 | 2217269 | -2 |
| KRNT | 21 | 205384 | -3 |
| DCT | 18 | 255841 | -1 |
| NCNO | 25 | 412906 | 4 |
| VRM | 21 | 180671 | 0 |
| EXEL | 33 | 802812 | 6 |
| Average | 21.3 | 589113 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $589 million. That figure was $562 million in CC’s case. Exelixis, Inc. (NASDAQ:EXEL) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 4 bullish hedge fund positions. The Chemours Company (NYSE:CC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CC is 52.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately CC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CC were disappointed as the stock returned -15.5% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Chemours Co (NYSE:CC)
Follow Chemours Co (NYSE:CC)
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Disclosure: None. This article was originally published at Insider Monkey.
