Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards PolyOne Corporation (NYSE:POL).
PolyOne Corporation (NYSE:POL) has seen an increase in hedge fund interest of late. Our calculations also showed that POL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when 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 analyze the new hedge fund action regarding PolyOne Corporation (NYSE:POL).
Hedge fund activity in PolyOne Corporation (NYSE:POL)
At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in POL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PolyOne Corporation (NYSE:POL) was held by Millennium Management, which reported holding $78.3 million worth of stock at the end of September. It was followed by AQR Capital Management with a $36.7 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and GLG Partners. In terms of the portfolio weights assigned to each position Barington Capital Group allocated the biggest weight to PolyOne Corporation (NYSE:POL), around 4.7% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, setting aside 1.61 percent of its 13F equity portfolio to POL.
As aggregate interest increased, key money managers have jumped into PolyOne Corporation (NYSE:POL) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in PolyOne Corporation (NYSE:POL). Balyasny Asset Management had $8.4 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $7.4 million position during the quarter. The other funds with brand new POL positions are Robert Vincent McHugh’s Jade Capital Advisors, Andrew Kurita’s Kettle Hill Capital Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PolyOne Corporation (NYSE:POL) but similarly valued. We will take a look at Allegiant Travel Company (NASDAQ:ALGT), International Bancshares Corp (NASDAQ:IBOC), Red Rock Resorts, Inc. (NASDAQ:RRR), and Acceleron Pharma Inc (NASDAQ:XLRN). This group of stocks’ market caps are similar to POL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALGT | 24 | 618035 | 6 |
| IBOC | 20 | 195845 | 3 |
| RRR | 18 | 363869 | 1 |
| XLRN | 27 | 392663 | 1 |
| Average | 22.25 | 392603 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $393 million. That figure was $265 million in POL’s case. Acceleron Pharma Inc (NASDAQ:XLRN) is the most popular stock in this table. On the other hand Red Rock Resorts, Inc. (NASDAQ:RRR) is the least popular one with only 18 bullish hedge fund positions. PolyOne Corporation (NYSE:POL) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately POL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on POL were disappointed as the stock returned -51.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
