Is Braskem SA (ADR) (NYSE:BAK) a bargain? The best stock pickers are turning bullish. The number of long hedge fund bets improved by 3 in recent months.
At the moment, there are a multitude of indicators market participants can use to watch publicly traded companies. A duo of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace their index-focused peers by a healthy amount (see just how much).
Equally as key, positive insider trading sentiment is a second way to parse down the stock market universe. Just as you’d expect, there are a number of reasons for a bullish insider to sell shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).
With these “truths” under our belt, let’s take a gander at the recent action encompassing Braskem SA (ADR) (NYSE:BAK).
Hedge fund activity in Braskem SA (ADR) (NYSE:BAK)
At the end of the fourth quarter, a total of 6 of the hedge funds we track were long in this stock, a change of 100% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly.
When looking at the hedgies we track, Israel Englander’s Millennium Management had the most valuable position in Braskem SA (ADR) (NYSE:BAK), worth close to $2.3 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $2.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Mike Vranos’s Ellington.
As industrywide interest jumped, specific money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Braskem SA (ADR) (NYSE:BAK). Citadel Investment Group had 1 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Steven Cohen’s SAC Capital Advisors.
What have insiders been doing with Braskem SA (ADR) (NYSE:BAK)?
Bullish insider trading is most useful when the company in focus has experienced transactions within the past six months. Over the latest half-year time period, Braskem SA (ADR) (NYSE:BAK) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Braskem SA (ADR) (NYSE:BAK). These stocks are FMC Corp (NYSE:FMC), Celanese Corporation (NYSE:CE), Huntsman Corporation (NYSE:HUN), Ashland Inc. (NYSE:ASH), and Valhi, Inc. (NYSE:VHI). This group of stocks are the members of the chemicals – major diversified industry and their market caps are closest to BAK’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| FMC Corp (NYSE:FMC) | 18 | 0 | 1 |
| Celanese Corporation (NYSE:CE) | 24 | 0 | 2 |
| Huntsman Corporation (NYSE:HUN) | 29 | 0 | 4 |
| Ashland Inc. (NYSE:ASH) | 28 | 0 | 6 |
| Valhi, Inc. (NYSE:VHI) | 5 | 1 | 0 |
With the returns exhibited by Insider Monkey’s studies, everyday investors should always watch hedge fund and insider trading activity, and Braskem SA (ADR) (NYSE:BAK) shareholders fit into this picture quite nicely.
