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Hedge Funds Never Been Less Bullish On Huntsman Corporation (HUN)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Huntsman Corporation (NYSE:HUN) based on that data.

Is Huntsman Corporation (NYSE:HUN) going to take off soon? Prominent investors are becoming less hopeful. The number of long hedge fund positions were cut by 18 lately. Our calculations also showed that HUN 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Yacktman of Yacktman Asset Management

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 we’re going to check out the recent hedge fund action surrounding Huntsman Corporation (NYSE:HUN).

What does smart money think about Huntsman Corporation (NYSE:HUN)?

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -46% from one quarter earlier. On the other hand, there were a total of 35 hedge funds with a bullish position in HUN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Yacktman Asset Management was the largest shareholder of Huntsman Corporation (NYSE:HUN), with a stake worth $96.7 million reported as of the end of September. Trailing Yacktman Asset Management was Holocene Advisors, which amassed a stake valued at $56.3 million. Royce & Associates, Citadel Investment Group, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Swift Run Capital Management allocated the biggest weight to Huntsman Corporation (NYSE:HUN), around 6.32% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, setting aside 3.35 percent of its 13F equity portfolio to HUN.

Judging by the fact that Huntsman Corporation (NYSE:HUN) has faced a decline in interest from the smart money, we can see that there was a specific group of hedge funds that slashed their full holdings in the first quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising close to $27.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund sold off about $25.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 18 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Huntsman Corporation (NYSE:HUN). These stocks are Parsons Corporation (NYSE:PSN), Cemex SAB de CV (NYSE:CX), L Brands Inc (NYSE:LB), and Pure Storage, Inc. (NYSE:PSTG). This group of stocks’ market caps are closest to HUN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSN 15 93372 5
CX 12 98642 -1
LB 39 919960 -7
PSTG 25 320708 -4
Average 22.75 358171 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $358 million. That figure was $305 million in HUN’s case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Cemex SAB de CV (NYSE:CX) is the least popular one with only 12 bullish hedge fund positions. Huntsman Corporation (NYSE:HUN) is not the least popular stock in this group but hedge fund interest is still below 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on HUN as the stock returned 30.8% during the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.