Hedge Funds Are Dumping PolyOne Corporation (POL)

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze PolyOne Corporation (NYSE:POL) from the perspective of those elite funds.

Is PolyOne Corporation (NYSE:POL) a buy here? Investors who are in the know are in a slightly pessimistic mood. The number of long hedge fund positions decreased by 1 lately. At the end of this article we will also compare POL to other stocks including Woodward Inc (NASDAQ:WWD), Artisan Partners Asset Management Inc (NYSE:APAM), and Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) to get a better sense of its popularity.

In the eyes of most shareholders, hedge funds are seen as unimportant, outdated investment tools of the past. While there are greater than 8000 funds in operation at the moment, Our experts hone in on the moguls of this group, approximately 700 funds. Most estimates calculate that this group of people command most of the smart money’s total capital, and by shadowing their top picks, Insider Monkey has revealed various investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, we’re going to take a gander at the latest action surrounding PolyOne Corporation (NYSE:POL).

How have hedgies been trading PolyOne Corporation (NYSE:POL)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Joel Greenblatt’s Gotham Asset Management has the biggest position in PolyOne Corporation (NYSE:POL), worth close to $7.6 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Marshall Wace LLP, managed by Paul Marshall and Ian Wace, which holds an $4.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Debra Fine’s Fine Capital Partners, Matthew Tewksbury’s Stevens Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

Seeing as PolyOne Corporation (NYSE:POL) has faced falling interest from hedge fund managers, it’s easy to see that there is a sect of fund managers that elected to cut their full holdings by the end of the third quarter. Interestingly, Jim Simons’s Renaissance Technologies cut the largest position of the 700 funds watched by Insider Monkey, totaling about $10.7 million in stock, and Vince Maddi and Shawn Brennan’s SIR Capital Management was right behind this move, as the fund said goodbye to about $7.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to PolyOne Corporation (NYSE:POL). We will take a look at Woodward Inc (NASDAQ:WWD), Artisan Partners Asset Management Inc (NYSE:APAM), Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), and Hudson Pacific Properties Inc (NYSE:HPP). This group of stocks’ market valuations resemble POL’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was just $18 million in POL’s case. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is the most popular stock in this table. On the other hand Artisan Partners Asset Management Inc (NYSE:APAM) is the least popular one with only 10 bullish hedge fund positions. PolyOne Corporation (NYSE:POL) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CCO might be a better candidate to consider a long position.