The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Westlake Chemical Corporation (NYSE:WLK) and determine whether the smart money was really smart about this stock.
Westlake Chemical Corporation (NYSE:WLK) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. WLK investors should be aware of a decrease in activity from the world’s largest hedge funds of late. There were 35 hedge funds in our database with WLK holdings at the end of June. Our calculations also showed that WLK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Thomas Claugus of GMT Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s view the key hedge fund action surrounding Westlake Chemical Corporation (NYSE:WLK).
Do Hedge Funds Think WLK Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the second quarter of 2021. On the other hand, there were a total of 26 hedge funds with a bullish position in WLK a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Westlake Chemical Corporation (NYSE:WLK) was held by Millennium Management, which reported holding $117.7 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $55.4 million position. Other investors bullish on the company included Balyasny Asset Management, AQR Capital Management, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Jade Capital Advisors allocated the biggest weight to Westlake Chemical Corporation (NYSE:WLK), around 4.26% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, designating 2 percent of its 13F equity portfolio to WLK.
Judging by the fact that Westlake Chemical Corporation (NYSE:WLK) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of funds that elected to cut their entire stakes heading into Q4. Intriguingly, Donald Sussman’s Paloma Partners cut the biggest position of the 750 funds followed by Insider Monkey, comprising close to $6.5 million in stock, and Jinghua Yan’s TwinBeech Capital was right behind this move, as the fund said goodbye to about $1.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Westlake Chemical Corporation (NYSE:WLK) but similarly valued. These stocks are Host Hotels and Resorts Inc (NYSE:HST), Darling Ingredients Inc. (NYSE:DAR), Dropbox, Inc. (NASDAQ:DBX), Globant SA (NYSE:GLOB), Atmos Energy Corporation (NYSE:ATO), Bunge Limited (NYSE:BG), and Universal Health Services, Inc. (NYSE:UHS). This group of stocks’ market values resemble WLK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HST | 16 | 178357 | -8 |
| DAR | 33 | 658844 | -8 |
| DBX | 41 | 967573 | 2 |
| GLOB | 21 | 601276 | -2 |
| ATO | 16 | 77442 | -2 |
| BG | 37 | 538805 | -3 |
| UHS | 43 | 751314 | 2 |
| Average | 29.6 | 539087 | -2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $539 million. That figure was $456 million in WLK’s case. Universal Health Services, Inc. (NYSE:UHS) is the most popular stock in this table. On the other hand Host Hotels and Resorts Inc (NYSE:HST) is the least popular one with only 16 bullish hedge fund positions. Westlake Chemical Corporation (NYSE:WLK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WLK is 66.5. 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 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on WLK as the stock returned 8.6% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
