Is Eastman Chemical Company (NYSE:EMN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is EMN stock a buy? Eastman Chemical Company (NYSE:EMN) shareholders have witnessed an increase in hedge fund sentiment of late. Eastman Chemical Company (NYSE:EMN) was in 31 hedge funds’ portfolios at the end of December. The all time high for this statistic is 40. Our calculations also showed that EMN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a look at the latest hedge fund action surrounding Eastman Chemical Company (NYSE:EMN).
Do Hedge Funds Think EMN Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in EMN over the last 22 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping 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 $36 million worth of stock at the end of December. It was followed by Adage Capital Management with a $26.5 million position. Other investors bullish on the company included GMT Capital, Atlantic Investment Management, and GLG Partners. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to Eastman Chemical Company (NYSE:EMN), around 3.35% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, earmarking 1.65 percent of its 13F equity portfolio to EMN.
As aggregate interest increased, specific money managers have jumped into Eastman Chemical Company (NYSE:EMN) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the largest position in Eastman Chemical Company (NYSE:EMN). Adage Capital Management had $26.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $3.1 million investment in the stock during the quarter. The other funds with brand new EMN positions are Paul Tudor Jones’s Tudor Investment Corp, Qing Li’s Sciencast Management, and Ronald Hua’s Qtron Investments.
Let’s now review hedge fund activity in other stocks similar to Eastman Chemical Company (NYSE:EMN). These stocks are Discovery Inc. (NASDAQ:DISCA), Crown Holdings, Inc. (NYSE:CCK), Brookfield Property Partners LP (NYSE:BPY), Brown & Brown, Inc. (NYSE:BRO), ON Semiconductor Corporation (NASDAQ:ON), Sarepta Therapeutics Inc (NASDAQ:SRPT), and Cable One Inc (NYSE:CABO). This group of stocks’ market values are similar to EMN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DISCA | 28 | 226741 | -1 |
| CCK | 63 | 2030129 | 16 |
| BPY | 9 | 26137 | 1 |
| BRO | 29 | 931431 | 0 |
| ON | 45 | 1377409 | 16 |
| SRPT | 37 | 978493 | 2 |
| CABO | 17 | 827605 | -6 |
| Average | 32.6 | 913992 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $914 million. That figure was $134 million in EMN’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NYSE:BPY) is the least popular one with only 9 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 52.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. A small number of hedge funds were also right about betting on EMN as the stock returned 14.3% since the end of the fourth quarter (through 4/12) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
