The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on The Dow Chemical Company (NYSE:DOW) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is The Dow Chemical Company (NYSE:DOW) worth your attention right now? Hedge funds are becoming less hopeful. The number of long hedge fund bets dropped by 9 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Thermo Fisher Scientific Inc. (NYSE:TMO), Baidu.com, Inc. (ADR) (NASDAQ:BIDU), and Regeneron Pharmaceuticals Inc (NASDAQ:REGN) to gather more data points.
To the average investor there are tons of methods shareholders use to grade stocks. Some of the less utilized methods are hedge fund and insider trading signals. our experts have shown that, historically, those who follow the best picks of the best fund managers can beat the S&P 500 by a significant margin (see the details here).
Keeping this in mind, we’re going to take a look at the latest action encompassing The Dow Chemical Company (NYSE:DOW).
What have hedge funds been doing with The Dow Chemical Company (NYSE:DOW)?
Heading into Q4, a total of 56 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in The Dow Chemical Company (NYSE:DOW). Millennium Management has a $1.5558 billion position in the stock, comprising 3% of its 13F portfolio. The second largest stake is held by Third Point, led by Dan Loeb, holding a $996.4 million position; 9,4% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain Daniel S. Och’s OZ Management, D. E. Shaw’s D E Shaw and Larry Robbins’s Glenview Capital.
Judging by the fact that The Dow Chemical Company (NYSE:DOW) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of money managers that decided to sell off their positions entirely last quarter. At the top of the heap, Kenneth Mario Garschina’s Mason Capital Management cut the biggest position of the 700 funds tracked by Insider Monkey, worth an estimated $726.6 million in call options. Daniel S. Och’s fund, OZ Management, also dropped its call options, about $307.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 9 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Dow Chemical Company (NYSE:DOW) but similarly valued. We will take a look at Thermo Fisher Scientific Inc. (NYSE:TMO), Baidu.com, Inc. (ADR) (NASDAQ:BIDU), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), and The TJX Companies, Inc. (NYSE:TJX). All of these stocks’ market caps resemble DOW’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 43.25 hedge funds with bullish positions and the average amount invested in these stocks was $2447 million.That figure was $5592 million in DOW’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks, The Dow Chemical Company (NYSE:DOW) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio despite the total number of funds long Dow Chemical declining by 9.