Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of LyondellBasell Industries NV (NYSE:LYB).
LyondellBasell Industries NV (NYSE:LYB) has seen a decrease in activity from the world’s largest hedge funds in recent months. LYB was in 35 hedge funds’ portfolios at the end of the first quarter of 2020. There were 40 hedge funds in our database with LYB positions at the end of the previous quarter. Our calculations also showed that LYB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a multitude of methods market participants have at their disposal to size up their holdings. Some of the best methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top fund managers can outclass the market by a healthy amount (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the fresh hedge fund action surrounding LyondellBasell Industries NV (NYSE:LYB).
How have hedgies been trading LyondellBasell Industries NV (NYSE:LYB)?
Heading into the second quarter of 2020, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the fourth quarter of 2019. By comparison, 36 hedge funds held shares or bullish call options in LYB a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the number one position in LyondellBasell Industries NV (NYSE:LYB). Eagle Capital Management has a $178.1 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $78.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism consist of Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Elm Ridge Capital allocated the biggest weight to LyondellBasell Industries NV (NYSE:LYB), around 5.55% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, setting aside 3.65 percent of its 13F equity portfolio to LYB.
Judging by the fact that LyondellBasell Industries NV (NYSE:LYB) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few funds who sold off their full holdings last quarter. At the top of the heap, Larry Robbins’s Glenview Capital dropped the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $50.1 million in stock, and Lee Ainslie’s Maverick Capital was right behind this move, as the fund said goodbye to about $3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to LyondellBasell Industries NV (NYSE:LYB). These stocks are AMETEK, Inc. (NYSE:AME), Royal Bank of Scotland Group plc (NYSE:RBS), Palo Alto Networks Inc (NYSE:PANW), and Rogers Communications Inc. (NYSE:RCI). This group of stocks’ market caps are similar to LYB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $903 million. That figure was $475 million in LYB’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 5 bullish hedge fund positions. LyondellBasell Industries NV (NYSE:LYB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on LYB as the stock returned 28.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.