Is Huntsman Corporation (NYSE:HUN) a cheap stock to buy now? Prominent investors are getting more optimistic. The number of bullish hedge fund bets moved up by 4 in recent months.
According to most investors, hedge funds are seen as unimportant, old investment vehicles of the past. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the aristocrats of this club, around 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds' total asset base, and by monitoring their top stock picks, we have identified a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as key, positive insider trading sentiment is another way to parse down the investments you're interested in. As the old adage goes: there are a number of reasons for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this method if "monkeys" know what to do (learn more here).
Keeping this in mind, it's important to take a glance at the latest action regarding Huntsman Corporation (NYSE:HUN).
Heading into 2013, a total of 29 of the hedge funds we track were bullish in this stock, a change of 16% from the third quarter. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, John Burbank's Passport Capital had the most valuable position in Huntsman Corporation (NYSE:HUN), worth close to $191 million, comprising 7.4% of its total 13F portfolio. The second largest stake is held by Appaloosa Management LP, managed by David Tepper, which held a $118 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Other peers with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, David Dreman's Dreman Value Management and Timothy S. Peterson's Regiment Capital.
Now, some big names have jumped into Huntsman Corporation (NYSE:HUN) headfirst. Hayman Advisors, managed by Kyle Bass, assembled the biggest position in Huntsman Corporation (NYSE:HUN). Hayman Advisors had 22 million invested in the company at the end of the quarter. Andreas Halvorsen's Viking Global also initiated a $22 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson's Adage Capital Management, Sean Cullinan's Point State Capital, and Glenn Russell Dubin's Highbridge Capital Management.
Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Huntsman Corporation (NYSE:HUN) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
With the results shown by the aforementioned strategies, everyday investors should always watch hedge fund and insider trading sentiment, and Huntsman Corporation (NYSE:HUN) is no exception.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.