Hedge Funds Regret Selling These Soaring Stocks: Part 1

#3 Applied Materials, Inc. (NASDAQ:AMAT)

– Number of Hedge Fund Holders (as of September 30): 54
– Total Value of Hedge Fund Holdings (as of September 30): $1.6 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 8.80%

Applied Materials, Inc. (NASDAQ:AMAT) shares have rallied by almost 25% since the end of the third quarter as value investors step in to buy the stock’s at a forward P/E under 12 and as technical traders jump on to ride the trend. Although luminaries such as Larry Robbins’ Glenview Capital and David Einhorn’s Greenlight Capital own the stock, 11 fewer funds from our database reported stakes in the company, having sold out of their position from June 30 to September 30. Look for Applied Materials to do well once the semiconductor industry solves its oversupply problem.

#2 Dow Chemical Co (NYSE:DOW)
– Number of Hedge Fund Holders (as of September 30): 56
– Total Value of Hedge Fund Holdings (as of September 30): $5.59 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 11.40%

Because Dow Chemical Co (NYSE:DOW) announced that it will combine with E I Du Pont De Nemours And Co (NYSE:DD) in a merger-of-equals, its shares have surged by almost 25% since the end of the third quarter. Investors are salivating at the merger’s potential synergies, which management estimates to be as much as $3 billion within two years after the deal closes. A big winner in the deal is Dan Loeb’s Third Point, which owned 23.5 million shares of Dow Chemical at the end of September. However, during the third quarter, the number of funds bullish on the stock declined by nine. Among the sellers was Glenn Russell Dubin’s Highbridge Capital Management that sold out its position during the third quarter.