As we already know from media reports and hedge fund investor letters, many hedge funds lost money in October, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Celanese Corporation (NYSE:CE) in this article.
Celanese Corporation (NYSE:CE) was in 32 hedge funds’ portfolios at the end of September. CE has seen a decrease in enthusiasm from smart money lately. There were 33 hedge funds in our database with CE positions at the end of the previous quarter. Our calculations also showed that CE isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a glance at the latest hedge fund action encompassing Celanese Corporation (NYSE:CE).
How are hedge funds trading Celanese Corporation (NYSE:CE)?
Heading into the fourth quarter of 2018, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in CE at the beginning of this year. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, GMT Capital held the most valuable stake in Celanese Corporation (NYSE:CE), which was worth $414 million at the end of the third quarter. On the second spot was Millennium Management which amassed $215.3 million worth of shares. Moreover, AQR Capital Management, D E Shaw, and Renaissance Technologies were also bullish on Celanese Corporation (NYSE:CE), allocating a large percentage of their portfolios to this stock.
Since Celanese Corporation (NYSE:CE) has experienced declining sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their full holdings in the third quarter. At the top of the heap, Brandon Haley’s Holocene Advisors cut the biggest stake of the 700 funds monitored by Insider Monkey, totaling about $36.5 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also said goodbye to its stock, about $31 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Celanese Corporation (NYSE:CE). These stocks are Mercadolibre Inc (NASDAQ:MELI), Lennar Corporation (NYSE:LEN), Broadridge Financial Solutions, Inc. (NYSE:BR), and Mettler-Toledo International Inc. (NYSE:MTD). This group of stocks’ market caps resemble CE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MELI | 27 | 1977651 | -2 |
| LEN | 66 | 2818386 | 3 |
| BR | 33 | 536012 | 10 |
| MTD | 16 | 325551 | -2 |
| Average | 35.5 | 1414400 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.41 billion. That figure was $1.33 billion in CE’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Mettler-Toledo International Inc. (NYSE:MTD) is the least popular one with only 16 bullish hedge fund positions. Celanese Corporation (NYSE:CE) 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 LEN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
