Hedge Funds Aren’t Crazy About LyondellBasell Industries NV (LYB) Anymore

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about LyondellBasell Industries NV (NYSE:LYB).

LyondellBasell Industries NV (NYSE:LYB) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 57. LYB shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 41 hedge funds in our database with LYB holdings at the end of June. Our calculations also showed that LYB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s go over the recent hedge fund action regarding LyondellBasell Industries NV (NYSE:LYB).

Thomas Claugus of GMT Capital

Do Hedge Funds Think LYB Is A Good Stock To Buy Now?

At Q3’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. By comparison, 31 hedge funds held shares or bullish call options in LYB a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Boykin Curry’s Eagle Capital Management has the most valuable position in LyondellBasell Industries NV (NYSE:LYB), worth close to $302.5 million, corresponding to 0.9% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $56.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Renaissance Technologies. In terms of the portfolio weights assigned to each position Elm Ridge Capital allocated the biggest weight to LyondellBasell Industries NV (NYSE:LYB), around 3.93% of its 13F portfolio. Bourgeon Capital is also relatively very bullish on the stock, designating 1.72 percent of its 13F equity portfolio to LYB.

Since LyondellBasell Industries NV (NYSE:LYB) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few hedgies who sold off their entire stakes in the third quarter. It’s worth mentioning that Robert Pohly’s Samlyn Capital said goodbye to the biggest position of the 750 funds tracked by Insider Monkey, comprising an estimated $44.5 million in stock. Michael Cowley’s fund, Sandbar Asset Management, also dumped its stock, about $15.7 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LyondellBasell Industries NV (NYSE:LYB) but similarly valued. These stocks are Brown-Forman Corporation (NYSE:BF), MongoDB, Inc. (NASDAQ:MDB), Corning Incorporated (NYSE:GLW), Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX), Ferguson plc (NYSE:FERG), State Street Corporation (NYSE:STT), and AvalonBay Communities Inc (NYSE:AVB). All of these stocks’ market caps match LYB’s market cap.

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As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $1895 million. That figure was $677 million in LYB’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand Ferguson plc (NYSE:FERG) is the least popular one with only 10 bullish hedge fund positions. LyondellBasell Industries NV (NYSE:LYB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LYB is 62.7. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately LYB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LYB were disappointed as the stock returned -6% since the end of September (through 11/30) 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.

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Disclosure: None. This article was originally published at Insider Monkey.