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Hedge Funds Aren’t Crazy About Chemtura Corp (CHMT) Anymore

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Chemtura Corp (NYSE:CHMT) has seen a decrease in enthusiasm from smart money lately.

If you’d ask most shareholders, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are over 8000 funds with their doors open at present, we hone in on the bigwigs of this club, close to 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their highest performing investments, we have discovered a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, positive insider trading activity is another way to break down the financial markets. There are plenty of motivations for an executive to downsize shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this strategy if you know what to do (learn more here).

Consequently, it’s important to take a peek at the recent action encompassing Chemtura Corp (NYSE:CHMT).

How are hedge funds trading Chemtura Corp (NYSE:CHMT)?

At the end of the first quarter, a total of 27 of the hedge funds we track were long in this stock, a change of -7% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, James Dinan’s York Capital Management had the most valuable position in Chemtura Corp (NYSE:CHMT), worth close to $102.6 million, comprising 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Gilchrist Berg of Water Street Capital, with a $86.3 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include David Gallo’s Valinor Management LLC, D. E. Shaw’s D E Shaw and Steven Cohen’s SAC Capital Advisors.

Seeing as Chemtura Corp (NYSE:CHMT) has experienced falling interest from the smart money, it’s easy to see that there was a specific group of funds who were dropping their positions entirely last quarter. Interestingly, Thomas A. Giovine’s Giovine Capital dumped the largest position of all the hedgies we monitor, totaling an estimated $11.3 million in stock., and Richard Driehaus of Driehaus Capital was right behind this move, as the fund dumped about $5 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.

How are insiders trading Chemtura Corp (NYSE:CHMT)?

Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last half-year time period, Chemtura Corp (NYSE:CHMT) has experienced 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Chemtura Corp (NYSE:CHMT). These stocks are PolyOne Corporation (NYSE:POL), Sensient Technologies Corporation (NYSE:SXT), HB Fuller Co (NYSE:FUL), Olin Corporation (NYSE:OLN), and Cabot Corp (NYSE:CBT). This group of stocks belong to the specialty chemicals industry and their market caps match CHMT’s market cap.

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