Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
PolyOne Corporation (NYSE:POL) was in 14 hedge funds’ portfolios at the end of September. POL investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 18 hedge funds in our database with POL holdings at the end of the previous quarter. At the end of this article we will also compare POL to other stocks including Bank of Hawaii Corporation (NYSE:BOH), Chimera Investment Corporation (NYSE:CIM), and Starz (NASDAQ:STRZA) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a look at the fresh action surrounding PolyOne Corporation (NYSE:POL).
How are hedge funds trading PolyOne Corporation (NYSE:POL)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards POL over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in PolyOne Corporation (NYSE:POL), worth close to $11.8 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $11.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’s AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that PolyOne Corporation (NYSE:POL) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of fund managers that slashed their full holdings heading into Q4. Interestingly, Jonathan Barrett and Paul Segal’s Luminus Management dropped the biggest position of the 700 funds tracked by Insider Monkey, comprising an estimated $7.9 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund sold off about $1.9 million worth of shares.
Let’s also examine hedge fund activity in other stocks similar to PolyOne Corporation (NYSE:POL). These stocks are Bank of Hawaii Corporation (NYSE:BOH), Chimera Investment Corporation (NYSE:CIM), Starz (NASDAQ:STRZA), and Brandywine Realty Trust (NYSE:BDN). This group of stocks’ market valuations are similar to POL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BOH | 10 | 49640 | 2 |
| CIM | 11 | 106391 | -2 |
| STRZA | 28 | 470317 | -7 |
| BDN | 12 | 43353 | -1 |
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $63 million in POL’s case. Starz (NASDAQ:STRZA) is the most popular stock in this table. On the other hand Bank of Hawaii Corporation (NYSE:BOH) 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 STRZA might be a better candidate to consider taking a long position in.
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