Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The Chemours Company (NYSE:CC).
Is The Chemours Company (NYSE:CC) going to take off soon? The best stock pickers are buying. The number of long hedge fund positions advanced by 3 in recent months. Our calculations also showed that CC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the latest hedge fund action regarding The Chemours Company (NYSE:CC).
Hedge fund activity in The Chemours Company (NYSE:CC)
Heading into the second quarter of 2020, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. By comparison, 30 hedge funds held shares or bullish call options in CC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in The Chemours Company (NYSE:CC) was held by Sessa Capital, which reported holding $89.4 million worth of stock at the end of September. It was followed by Greenlight Capital with a $43.3 million position. Other investors bullish on the company included Miller Value Partners, Luminus Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Sessa Capital allocated the biggest weight to The Chemours Company (NYSE:CC), around 10.95% of its 13F portfolio. Greenlight Capital is also relatively very bullish on the stock, designating 6.17 percent of its 13F equity portfolio to CC.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Luminus Management, managed by Jonathan Barrett and Paul Segal, established the biggest position in The Chemours Company (NYSE:CC). Luminus Management had $21.6 million invested in the company at the end of the quarter. Matt Sirovich and Jeremy Mindich’s Scopia Capital also initiated a $7.7 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Sahm Adrangi’s Kerrisdale Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Chemours Company (NYSE:CC) but similarly valued. These stocks are Monro Inc (NASDAQ:MNRO), LivePerson, Inc. (NASDAQ:LPSN), M.D.C. Holdings, Inc. (NYSE:MDC), and First Merchants Corporation (NASDAQ:FRME). This group of stocks’ market values are similar to CC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MNRO | 14 | 87142 | -4 |
| LPSN | 15 | 96549 | -8 |
| MDC | 14 | 61401 | -3 |
| FRME | 12 | 64591 | 0 |
| Average | 13.75 | 77421 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $239 million in CC’s case. LivePerson, Inc. (NASDAQ:LPSN) is the most popular stock in this table. On the other hand First Merchants Corporation (NASDAQ:FRME) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks The Chemours Company (NYSE:CC) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on CC as the stock returned 51.1% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
