Is Stepan Company (SCL) A Good Stock To Buy?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Algert Coldiron Investors).

Let’s now take a look at hedge fund activity in other stocks similar to Stepan Company (NYSE:SCL). We will take a look at Columbia Pipeline Partners LP (NYSE:CPPL), Fairmount Santrol Holdings Inc (NYSE:FMSA), Etsy Inc (NASDAQ:ETSY), and Oil States International, Inc. (NYSE:OIS). This group of stocks’ market values resemble SCL’s market value.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $50 million in SCL’s case. Fairmount Santrol Holdings Inc (NYSE:FMSA) is the most popular stock in this table. On the other hand Columbia Pipeline Partners LP (NYSE:CPPL) is the least popular one with only 9 bullish hedge fund positions. Stepan Company (NYSE:SCL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FMSA might be a better candidate to consider taking a long position in.

Disclosure: none.