Is Huntsman Corporation (HUN) Going to Burn These Hedge Funds?

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If you were to ask many of your peers, hedge funds are viewed as overrated, old investment vehicles of an era lost to time. Although there are In excess of 8,000 hedge funds trading currently, Insider Monkey aim at the bigwigs of this club, around 525 funds. It is widely held that this group controls the lion’s share of the smart money’s total assets, and by tracking their highest quality equity investments, we’ve come up with a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as key, optimistic insider trading activity is a second way to analyze the financial markets. As the old adage goes: there are a variety of reasons for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the impressive potential of this method if shareholders know where to look (learn more here).

Thus, let’s examine the latest info for Huntsman Corporation (NYSE:HUN).

What have hedge funds been doing with Huntsman Corporation (NYSE:HUN)?

Heading into Q3, a total of 32 of the hedge funds we track were bullish in this stock, a change of 10% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings considerably.

Huntsman Corporation (NYSE:HUN)When using filings from the hedgies we track, Doug Silverman and Alexander Klabin’s Senator Investment Group had the largest position in Huntsman Corporation (NYSE:HUN), worth close to $149 million, accounting for 2.3% of its total 13F portfolio. Coming in second is David Tepper of Appaloosa Management LP, with a $115.2 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Keith Meister’s Corvex Capital, Rob Citrone’s Discovery Capital Management and Dmitry Balyasny’s Balyasny Asset Management.

Consequently, certain bigger names were breaking ground themselves. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, created the biggest position in Huntsman Corporation (NYSE:HUN). Senator Investment Group had 149 million invested in the company at the end of the quarter. David Tepper’s Appaloosa Management LP also initiated a $115.2 million position during the quarter. The following funds were also among the new HUN investors: Keith Meister’s Corvex Capital, Rob Citrone’s Discovery Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

How have insiders been trading Huntsman Corporation (NYSE:HUN)?

Insider buying is best served when the company in focus has seen transactions within the past half-year. Over the last 180-day time frame, Huntsman Corporation (NYSE:HUN) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Huntsman Corporation (NYSE:HUN). These stocks are FMC Corp (NYSE:FMC), Celanese Corporation (NYSE:CE), Ashland Inc. (NYSE:ASH), Valhi, Inc. (NYSE:VHI), and Braskem SA (ADR) (NYSE:BAK). This group of stocks belong to the chemicals – major diversified industry and their market caps resemble HUN’s market cap.

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