Is The Dow Chemical Company (NYSE:DOW) a good investment?
To the average investor, there are plenty of methods shareholders can use to track their holdings. A pair of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite investment managers can beat their index-focused peers by a solid amount (see just how much).
Just as crucial, optimistic insider trading activity is a second way to analyze the world of equities. There are lots of stimuli for a bullish insider to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this tactic if shareholders understand what to do (learn more here).
Furthermore, it’s important to discuss the recent info about The Dow Chemical Company (NYSE:DOW).
How have hedgies been trading The Dow Chemical Company (NYSE:DOW)?
Heading into Q3, a total of 23 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially.
Out of the hedge funds we follow, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in The Dow Chemical Company (NYSE:DOW). Adage Capital Management has a $56.9 million position in the stock, comprising 0.2% of its 13F portfolio. On Adage Capital Management’s heels is Matt McLennan of First Eagle Investment Management, with a $46.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds that are bullish include D. E. Shaw’s D E Shaw, Jason Adler’s AlphaBet Management and Ken Griffin’s Citadel Investment Group.
Because The Dow Chemical Company (NYSE:DOW) has experienced bearish sentiment from the top-tier hedge fund industry, logic holds that there was a specific group of money managers that slashed their full holdings heading into Q2. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group said goodbye to the biggest position of the “upper crust” of funds we watch, comprising about $238.8 million in stock, and Steven Cohen of SAC Capital Advisors was right behind this move, as the fund dropped about $56.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading The Dow Chemical Company (NYSE:DOW)?
Legal insider trading, particularly when it’s bullish, is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time frame, The Dow Chemical Company (NYSE:DOW) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to The Dow Chemical Company (NYSE:DOW). These stocks are FMC Corp (NYSE:FMC), Eastman Chemical Company (NYSE:EMN), Sociedad Quimica y Minera (ADR) (NYSE:SQM), Air Products & Chemicals, Inc. (NYSE:APD), and E I Du Pont De Nemours And Co (NYSE:DD). All of these stocks are in the chemicals – major diversified industry and their market caps match DOW’s market cap.