Is Air Products & Chemicals, Inc. (NYSE:APD) the right pick for your portfolio? Money managers are becoming less confident. The number of long hedge fund bets were trimmed by 2 in recent months.
To most shareholders, hedge funds are perceived as slow, old investment vehicles of years past. While there are over 8000 funds in operation at the moment, we look at the top tier of this group, around 450 funds. It is estimated that this group has its hands on the majority of the hedge fund industry’s total asset base, and by monitoring their top investments, we have identified a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 topped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as important, optimistic insider trading activity is another way to parse down the marketplace. There are plenty of incentives for a bullish insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this tactic if investors understand what to do (learn more here).
With all of this in mind, it’s important to take a gander at the key action encompassing Air Products & Chemicals, Inc. (NYSE:APD).
What have hedge funds been doing with Air Products & Chemicals, Inc. (NYSE:APD)?
In preparation for this year, a total of 16 of the hedge funds we track were bullish in this stock, a change of -11% from the third quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Greenhaven Associates, managed by Edgar Wachenheim, holds the largest position in Air Products & Chemicals, Inc. (NYSE:APD). Greenhaven Associates has a $302.6 million position in the stock, comprising 9.2% of its 13F portfolio. Coming in second is Ric Dillon of Diamond Hill Capital, with a $76.9 million position; 0.9% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Brett Barakett’s Tremblant Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and D. E. Shaw’s D E Shaw.
Due to the fact that Air Products & Chemicals, Inc. (NYSE:APD) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers who were dropping their entire stakes last quarter. It’s worth mentioning that Sander Gerber’s Hudson Bay Capital Management cut the largest position of all the hedgies we watch, valued at about $2.4 million in call options. Ken Gray and Steve Walsh’s fund, Bryn Mawr Capital, also sold off its stock, about $1.8 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds last quarter.
What do corporate executives and insiders think about Air Products & Chemicals, Inc. (NYSE:APD)?
Bullish insider trading is best served when the company in focus has seen transactions within the past six months. Over the last half-year time period, Air Products & Chemicals, Inc. (NYSE:APD) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Air Products & Chemicals, Inc. (NYSE:APD). These stocks are E I Du Pont De Nemours And Co (NYSE:DD), FMC Corp (NYSE:FMC), The Dow Chemical Company (NYSE:DOW), Eastman Chemical Company (NYSE:EMN), and Sociedad Quimica y Minera (ADR) (NYSE:SQM). This group of stocks are the members of the chemicals – major diversified industry and their market caps match APD’s market cap.