Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by 4 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at PolyOne Corporation (NYSE:POL) from the perspective of those elite funds.
Is PolyOne Corporation (NYSE:POL) a superb investment today? Hedge funds are taking an optimistic view. The number of bullish hedge fund positions rose by 1 recently. Our calculations also showed that POL isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the recent hedge fund action regarding PolyOne Corporation (NYSE:POL).
What have hedge funds been doing with PolyOne Corporation (NYSE:POL)?
At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in POL over the last 16 quarters. So, let’s review 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 $50.4 million worth of stock at the end of March. It was followed by D E Shaw with a $36.2 million position. Other investors bullish on the company included Citadel Investment Group, AQR Capital Management, and Renaissance Technologies.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, established the most valuable position in PolyOne Corporation (NYSE:POL). Winton Capital Management had $12.1 million invested in the company at the end of the quarter. James A. Mitarotonda’s Barington Capital Group also initiated a $10.8 million position during the quarter. The other funds with brand new POL positions are Jonathan Barrett and Paul Segal’s Luminus Management, Nick Niell’s Arrowgrass Capital Partners, and Vince Maddi and Shawn Brennan’s SIR Capital Management.
Let’s check out hedge fund activity in other stocks similar to PolyOne Corporation (NYSE:POL). We will take a look at SITE Centers Corp. (NYSE:SITC), CoreCivic, Inc. (NYSE:CXW), Kosmos Energy Ltd (NYSE:KOS), and Xenia Hotels & Resorts Inc (NYSE:XHR). This group of stocks’ market caps are closest to POL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SITC | 15 | 53109 | 1 |
| CXW | 14 | 147007 | 0 |
| KOS | 24 | 216270 | 6 |
| XHR | 12 | 37569 | 3 |
| Average | 16.25 | 113489 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $224 million in POL’s case. Kosmos Energy Ltd (NYSE:KOS) is the most popular stock in this table. On the other hand Xenia Hotels & Resorts Inc (NYSE:XHR) is the least popular one with only 12 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on POL, though not to the same extent, as the stock returned 4.6% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
