Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards LyondellBasell Industries NV (NYSE:LYB) at the end of the third quarter and determine whether the smart money was really smart about this stock.
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 hedge fund sentiment lately. 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 check out the key hedge fund action surrounding LyondellBasell Industries NV (NYSE:LYB).
Thomas Claugus of GMT Capital
Do Hedge Funds Think LYB Is A Good Stock To Buy Now?
At the end of September, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards LYB over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Eagle Capital Management held the most valuable stake in LyondellBasell Industries NV (NYSE:LYB), which was worth $302.5 million at the end of the third quarter. On the second spot was Millennium Management which amassed $56.7 million worth of shares. AQR Capital Management, D E Shaw, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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, earmarking 1.72 percent of its 13F equity portfolio to LYB.
Due to the fact that LyondellBasell Industries NV (NYSE:LYB) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of funds who sold off their full holdings heading into Q4. Interestingly, Robert Pohly’s Samlyn Capital said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising close to $44.5 million in stock. Michael Cowley’s fund, Sandbar Asset Management, also sold off its stock, about $15.7 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as LyondellBasell Industries NV (NYSE:LYB) but similarly valued. We will take a look at 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 resemble LYB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BF | 31 | 1656640 | 0 |
| MDB | 47 | 2171957 | 3 |
| GLW | 40 | 408052 | -2 |
| FMX | 13 | 610447 | 0 |
| FERG | 10 | 6564548 | -1 |
| STT | 42 | 1479764 | 5 |
| AVB | 28 | 376882 | 2 |
| Average | 30.1 | 1895470 | 1 |
View table here if you experience formatting issues.
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. 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on LYB as the stock returned 4.4% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
