The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Eastman Chemical Company (NYSE:EMN) based on those filings.
Eastman Chemical Company (NYSE:EMN) was in 27 hedge funds’ portfolios at the end of March. The all time high for this statistic is 40. EMN investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 31 hedge funds in our database with EMN positions at the end of the fourth quarter. Our calculations also showed that EMN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
According to most shareholders, hedge funds are assumed to be underperforming, old financial tools of years past. While there are greater than 8000 funds in operation at present, We hone in on the upper echelon of this club, about 850 funds. It is estimated that this group of investors orchestrate most of all hedge funds’ total asset base, and by tailing their top equity investments, Insider Monkey has spotted various investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Fred DiSanto of Ancora Advisors
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Do Hedge Funds Think EMN Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the fourth quarter of 2020. On the other hand, there were a total of 29 hedge funds with a bullish position in EMN a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Eastman Chemical Company (NYSE:EMN) was held by AQR Capital Management, which reported holding $38.7 million worth of stock at the end of December. It was followed by Adage Capital Management with a $29.5 million position. Other investors bullish on the company included Ancora Advisors, GMT Capital, and Scopus Asset Management. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to Eastman Chemical Company (NYSE:EMN), around 3.41% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, earmarking 0.95 percent of its 13F equity portfolio to EMN.
Due to the fact that Eastman Chemical Company (NYSE:EMN) has witnessed declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their full holdings in the first quarter. At the top of the heap, Noam Gottesman’s GLG Partners dropped the largest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $6 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also sold off its stock, about $3.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Eastman Chemical Company (NYSE:EMN) but similarly valued. These stocks are Franklin Templeton Investment Funds – Franklin U.S. Opportunities Fund (NYSE:BEN), Westinghouse Air Brake Technologies Corporation (NYSE:WAB), China Southern Airlines Co Ltd (NYSE:ZNH), Solaredge Technologies Inc (NASDAQ:SEDG), Bio-Techne Corporation (NASDAQ:TECH), Liberty Global plc (NASDAQ:LBTYA), and The Boston Beer Company Inc (NYSE:SAM). This group of stocks’ market caps are closest to EMN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BEN | 31 | 198221 | -2 |
| WAB | 40 | 2481343 | -5 |
| ZNH | 3 | 15588 | 0 |
| SEDG | 32 | 420741 | 4 |
| TECH | 23 | 411800 | -1 |
| LBTYA | 35 | 848078 | -1 |
| SAM | 29 | 903673 | -6 |
| Average | 27.6 | 754206 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $754 million. That figure was $162 million in EMN’s case. Westinghouse Air Brake Technologies Corporation (NYSE:WAB) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 3 bullish hedge fund positions. Eastman Chemical Company (NYSE:EMN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EMN is 53.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately EMN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); EMN investors were disappointed as the stock returned 5% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
