Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about LyondellBasell Industries NV (NYSE:LYB) in this article.
Is LYB a good stock to buy? Investors who are in the know were selling. The number of bullish hedge fund positions decreased by 1 recently. LyondellBasell Industries NV (NYSE:LYB) was in 31 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 57. Our calculations also showed that LYB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 32 hedge funds in our database with LYB positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Boykin Curry of Eagle Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 peek at the latest hedge fund action regarding LyondellBasell Industries NV (NYSE:LYB).
Do Hedge Funds Think LYB Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in LYB a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Eagle Capital Management was the largest shareholder of LyondellBasell Industries NV (NYSE:LYB), with a stake worth $248.5 million reported as of the end of September. Trailing Eagle Capital Management was Arrowstreet Capital, which amassed a stake valued at $157.3 million. AQR Capital Management, Point72 Asset Management, and Citadel Investment Group 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 5% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, dishing out 3.27 percent of its 13F equity portfolio to LYB.
Because LyondellBasell Industries NV (NYSE:LYB) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that slashed their positions entirely heading into Q4. Interestingly, Brandon Haley’s Holocene Advisors cut the biggest position of all the hedgies watched by Insider Monkey, valued at an estimated $21 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also dropped its stock, about $6.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as LyondellBasell Industries NV (NYSE:LYB) but similarly valued. These stocks are Verisign, Inc. (NASDAQ:VRSN), ZTO Express (Cayman) Inc. (NYSE:ZTO), Sirius XM Holdings Inc (NASDAQ:SIRI), Church & Dwight Co., Inc. (NYSE:CHD), Mettler-Toledo International Inc. (NYSE:MTD), Zillow Group Inc (NASDAQ:Z), and Lloyds Banking Group PLC (NYSE:LYG). This group of stocks’ market valuations match LYB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRSN | 46 | 6088181 | -1 |
| ZTO | 22 | 499840 | 4 |
| SIRI | 37 | 748381 | -5 |
| CHD | 36 | 549977 | 3 |
| MTD | 30 | 603316 | 3 |
| Z | 69 | 3716280 | 10 |
| LYG | 5 | 3478 | -2 |
| Average | 35 | 1744208 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1744 million. That figure was $604 million in LYB’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 5 bullish hedge fund positions. LyondellBasell Industries NV (NYSE:LYB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LYB is 40.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on LYB as the stock returned 30.5% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
