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Hedge Funds’ Favorite Industrial Stocks Going Into 2016

#4 Dow Chemical Co (NYSE:DOW)

– Investors with Long Positions (as of December 31): 49

– Aggregate Value of Investors’ Holdings (as of December 31): $4.47 Billion

Though its stock rose by over 18% during the fourth quarter, Dow Chemical Co (NYSE:DOW)’s saw its popularity decline among hedge funds during the same period. The hedge funds covered by us that were long in the stock declined by seven and the aggregate value of their holdings decreased by over $1.11 billion during the last quarter of 2015. In December, Dow Chemical Co (NYSE:DOW) announced that it will merge with E I Du Pont De Nemours And Co (NYSE:DD). Along with merger announcement, both the companies also made it clear that a few years after the merger gets completed they plan to split the combined entity into three different businesses. The better than expected fourth quarter numbers declared by Dow Chemical Co has helped its stock to recoup some of the loss it suffered earlier in the year, however, it still trades down 2.78% year-to-date. Dow Chemical Co currently pays a quarterly dividend of $0.46 per share, which translates into an attractive annual dividend yield of 3.7%. Billionaire Dan Loeb‘s Third Point increased its stake in the company by 8% to 25.25 million shares during the fourth quarter.

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#3 Procter & Gamble Co (NYSE:PG)

– Investors with Long Positions (as of December 31): 52

– Aggregate Value of Investors’ Holdings (as of December 31): $9 Billion

Moving on, hedge funds covered by us that were long in Procter & Gamble Co (NYSE:PG) declined by six during the fourth quarter. However, the aggregate value of their holdings in the company saw only a marginal decline during the same period. Shares of Procter & Gamble Co (NYSE:PG) have been on a gradual rise since September last year, registering gains of 10.4% during the fourth quarter and currently trading up 2.27% year-to-date. Despite this rise, Procter & Gamble Co currently sports an attractive annual dividend yield of 3.27%. Some analysts who cover the stock feel that the stock has overstretched itself in the last few months and it would be hard for it to continue its bull run going forward. According to them, the stock currently trading at trailing P/E of 26.84 is overvalued and the company faces major currency and transportation cost headwinds, which will impact its financial performance. Donald Yacktman’s Yacktman Asset Management reduced its stake in Procter & Gamble Co by 22% to 21.59 million during the October-December period.

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#2 LyondellBasell Industries NV (NYSE:LYB)

– Investors with Long Positions (as of December 31): 55

– Aggregate Value of Investors’ Holdings (as of December 31): $3.17 Billion

LyondellBasell Industries NV (NYSE:LYB) saw a slight decrease in its popularity during the fourth quarter, as the number of investors that were long in it declined by two and the aggregate value of their holdings in it dropped by $663 million during that time. Investors who reduced their stake in the company fourth quarter included billionaire Andreas Halvorsen‘ Viking Global, which brought its holding down by 22% to nearly 9.33 million shares. After trading below their 50-Day moving average for three months, shares of LyondellBasell Industries NV (NYSE:LYB) have recently breached it from the upside and along with it also broken their critical resistance near the $80 mark, which technical analysts see as a very positive sign for the stock in the short-term. Since the stock is currently trading at a very low forward P/E of 8.41, even fundamental analysts believe that it is poised to move higher in the near future. The 24 prominent analysts who cover LyondellBasell Industries NV’s stock currently have an average rating of ‘Overweight’ on it with an average price target of $90.90.

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