Despite a rough start to the year, basic materials ETF’s like ProShares Ultra Basic Materials (ETF) (NYSEARCA:UYM), WisdomTree Intl Basic Materials Fund (NYSEARCA:CCXE), Direxion Shares Exchange Traded Fund Trust (NYSEARCA:NUGT), and the Vanguard Materials ETF (NYSEARCA:VAW) are up substantially year-to-date. In fact, all of these ETF’s have managed to comfortably outperform major U.S. stock indexes. However, the weakness seen in the first 40 days of the year certainly opened up some attractive entry points for investors, many of which built up their stakes in the sector.
In this article we’ll take a look at five basic materials stocks, Air Products & Chemicals, Inc. (NYSE:APD), Dow Chemical Co (NYSE:DOW), Barrick Gold Corporation (USA) (NYSE:ABX), PPG Industries, Inc. (NYSE:PPG), and Newmont Mining Corp (NYSE:NEM), a collection of stocks which the billionaire investors in our database liked the most as of March 31.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
#5. Air Products & Chemicals, Inc. (NYSE:APD)
Let’s start with Air Products & Chemicals, Inc. (NYSE:APD), which nine of the billionaires in our database were long as of March 31, down by 25% quarter-over-quarter. Their collective stakes were valued at more than $3.25 billion at the end of March. Among them were Bill Ackman’s Pershing Square, with 7.6 million shares, and Andreas Halvorsen’s Viking Global, which held 6.9 million shares worth almost $1 billion in stock.
Shares of Air Products & Chemicals, Inc. (NYSE:APD) are up by about 15.6% year-to-date. According to a press release issued in early-June, the company inked an agreement to provide a technology license that will allow Air Liquide Advanced Technologies U.S. LLC “to practice the patented Air Products technology incorporated in the Society of Automotive Engineers (SAE) J2601 hydrogen fueling protocol. Air Products makes such hydrogen fueling technology licenses available for use around the world under fair, reasonable, and non-discriminatory (FRAND) terms.”
#4. Dow Chemical Co (NYSE:DOW)
Next up is Dow Chemical Co (NYSE:DOW), in which there was also a reduction in the number of billionaires long the stock, falling to nine as of March 31 from 13 three months earlier. Their combined stakes were valued at $2.5 billion at the end of March. Among the largest shareholders were Dan Loeb’s Third Point, which disclosed ownership of 25 million shares worth $1.27 billion as of March 31 (Third Point cut its position to 20 million shares as of June 30), and Larry Robbins’ Glenview Capital, with 7.24 million shares.
Shares of Dow Chemical Co (NYSE:DOW) are 1.65% in the green year-to-date, but up by more than 25% from their late-January lows, helped in part by the completion of the restructuring of its Dow Corning unit, which is now wholly owned by the company. Corning Incorporated (NYSE:GLW), which owned half of Dow Corning, swapped its stake of the business for $4.8 billion and a 40% stake in Hemlock Semiconductor.
On the next page we’ll take a look at three more basic materials stocks that are popular among billionaires.