Greenlight Capital, an investment management firm, published its “Global Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of -2.9% was recorded by the fund for the second quarter of 2021, compared to 8.5% for its e S&P 500 benchmark. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Greenlight Capital, the fund mentioned The Chemours Company (NYSE: CC), and discussed its stance on the firm. The Chemours Company is a Wilmington, Delaware-based chemicals company, that currently has a $5.5 billion market capitalization. CC delivered a 34.13% return since the beginning of the year, extending its 12-month returns to 79.44%. The stock closed at $33.25 per share on July 30, 2021.
Here is what Greenlight Capital has to say about The Chemours Company in its Q2 2021 investor letter:
“Titanium Dioxide
Titanium dioxide is the chemical that makes coatings and plastics white or opaque. There was substantial capacity added in China between 2011 and 2013, but little since. In fact, some Chinese capacity has been shuttered for economic and/or environmental reasons. The last plant built in the U.S. came on-line in 2016 and added 2.8% to global capacity. There had been no Western capacity built for many years prior to that, and presently, no Western company has announced plans to build new plants. The post-COVID construction boom (possibly followed by an infrastructure boom) has left the world structurally short titanium dioxide. Spot pricing is up substantially this year in the face of supply shortages.
We own Chemours (CC), which is one of the few industry players with some spare capacity and is poised to benefit from higher prices and volumes. It trades for around 10x this year’s consensus earnings estimates.”
Based on our calculations, The Chemours Company (NYSE: CC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CC was in 27 hedge fund portfolios at the end of the first quarter of 2021, compared to 30 funds in the fourth quarter of 2020. The Chemours Company (NYSE: CC) delivered a 10.10% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
