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LyondellBasell Industries NV (LYB): Will The Run Continue?

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LyondellBasell Industries NV (NYSE:LYB) has seen mixed interest from hedge funds and high-level insiders of late. Shares of the chemical company have been treated to a nice 2013–up almost 20%–so it’s worth asking the question: will it continue?

If you were to ask many investors, hedge funds are perceived as useless, outdated investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds trading currently, this site looks at the leaders of this group, close to 525 funds. It is assumed that this group controls the majority of the smart money’s total capital, and by paying attention to their highest quality investments, we’ve determined a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced 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 trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as key, optimistic insider trading sentiment is another way to look at the financial markets. There are a variety of motivations for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand where to look (learn more here).

Keeping this in mind, let’s analyze the newest info about LyondellBasell Industries NV (NYSE:LYB).

How are hedge funds trading LyondellBasell Industries NV (NYSE:LYB)?

In preparation for the third quarter, a total of 60 of the hedge funds we track held long positions in this stock, a change of -6% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings considerably.

LyondellBasell Industries NV (NYSE:LYB)According to our 13F database, Viking Global, managed by Andreas Halvorsen, holds the largest position in LyondellBasell Industries NV (NYSE:LYB). Viking Global has a $698.3 million position in the stock, comprising 3.9% of its 13F portfolio. On Viking Global’s heels is Discovery Capital Management, managed by Rob Citrone, which held a $300.3 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Other hedgies that are bullish include D. E. Shaw’s D E Shaw, Cliff Asness’s AQR Capital Management and Phill Gross and Robert Atchinson’s Adage Capital Management.

Because LyondellBasell Industries NV (NYSE:LYB) has witnessed declining interest from upper-tier hedge fund managers, we can see that there lies a certain “tier” of fund managers that elected to cut their full holdings at the end of the second quarter. Interestingly, Dan Loeb’s Third Point dropped the largest investment of the “upper crust” of funds we key on, comprising about $60.1 million in stock, and Jim Simons of Renaissance Technologies was right behind this move, as the fund sold off about $54.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds at the end of the second quarter.

Insider trading activity in LyondellBasell Industries NV (NYSE:LYB)

Insider buying made by high-level executives is best served when the company in question has experienced transactions within the past six months. Over the last half-year time period, LyondellBasell Industries NV (NYSE:LYB) has seen 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to LyondellBasell Industries NV (NYSE:LYB). These stocks are Westlake Chemical Corporation (NYSE:WLK), Sigma-Aldrich Corporation (NASDAQ:SIAL), Sherwin-Williams Company (NYSE:SHW), PPG Industries, Inc. (NYSE:PPG), and Williams Partners L.P. (NYSE:WPZ). This group of stocks belong to the specialty chemicals industry and their market caps are similar to LYB’s market cap.

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