Do Hedge Funds Love Sociedad Quimica y Minera de Chile (ADR) (SQM)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM) in this article.

Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM) has experienced a decrease in activity from the world’s largest hedge funds lately. There were 17 hedge funds in our database with SQM holdings at the end of the previous quarter. 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 Inc (ADR) (NYSE:WUBA), Zillow Inc (NASDAQ:Z), and Pilgrim’s Pride Corporation (NASDAQ:PPC) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, let’s take a peek at the fresh action regarding Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM).

Hedge fund activity in Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM)

At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the second quarter of 2016. By comparison, 8 hedge funds held shares or bullish call options in SQM heading into this year. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, led by Jim Simons, holds the biggest position in Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM). Renaissance Technologies has a $20 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $17.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism include Steve Cohen’s Point72 Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and John Horseman’s Horseman Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM) has sustained falling interest from the smart money, we can see that there was a specific group of hedge funds that elected to cut their entire stakes by the end of the third quarter. At the top of the heap, David Iben’s Kopernik Global Investors said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, worth about $5.6 million in stock, and Joseph Oughourlian and Michel Brogard’s Amber Capital was right behind this move, as the fund sold off about $4.4 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM). We will take a look at Inc (ADR) (NYSE:WUBA), Zillow Inc (NASDAQ:Z), Pilgrim’s Pride Corporation (NASDAQ:PPC), and Align Technology, Inc. (NASDAQ:ALGN). This group of stocks’ market values resemble SQM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WUBA 23 1038149 -6
Z 26 614342 0
PPC 21 235777 1
ALGN 37 589442 11

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $619 million. That figure was $78 million in SQM’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand Pilgrim’s Pride Corporation (NASDAQ:PPC) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM) is even less popular than PPC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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