Is KWR A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Quaker Chemical Corp (NYSE:KWR)?

Is KWR a good stock to buy now? Quaker Chemical Corp (NYSE:KWR) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Quaker Chemical Corp (NYSE:KWR) was in 16 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. There were 13 hedge funds in our database with KWR positions at the end of the second quarter. Our calculations also showed that KWR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a look at the recent hedge fund action regarding Quaker Chemical Corp (NYSE:KWR).

Do Hedge Funds Think KWR Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KWR over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Royce & Associates held the most valuable stake in Quaker Chemical Corp (NYSE:KWR), which was worth $107.1 million at the end of the third quarter. On the second spot was Greenhouse Funds which amassed $19.2 million worth of shares. GLG Partners, Citadel Investment Group, and Point72 Asset Management 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 Greenhouse Funds allocated the biggest weight to Quaker Chemical Corp (NYSE:KWR), around 2.93% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 1.16 percent of its 13F equity portfolio to KWR.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, established the largest position in Quaker Chemical Corp (NYSE:KWR). GLG Partners had $3.5 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0.6 million position during the quarter. The following funds were also among the new KWR investors: Jinghua Yan’s TwinBeech Capital, Israel Englander’s Millennium Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Quaker Chemical Corp (NYSE:KWR) but similarly valued. We will take a look at HollyFrontier Corporation (NYSE:HFC), Omnicell, Inc. (NASDAQ:OMCL), Taylor Morrison Home Corp (NYSE:TMHC), Western Alliance Bancorporation (NYSE:WAL), WNS (Holdings) Limited (NYSE:WNS), Goosehead Insurance, Inc. (NASDAQ:GSHD), and Affiliated Managers Group, Inc. (NYSE:AMG). All of these stocks’ market caps match KWR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HFC 28 265738 1
OMCL 22 116470 6
TMHC 35 311698 2
WAL 28 125862 4
WNS 21 265140 1
GSHD 22 142736 7
AMG 23 312850 -4
Average 25.6 220071 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $142 million in KWR’s case. Taylor Morrison Home Corp (NYSE:TMHC) is the most popular stock in this table. On the other hand WNS (Holdings) Limited (NYSE:WNS) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Quaker Chemical Corp (NYSE:KWR) is even less popular than WNS. Our overall hedge fund sentiment score for KWR is 33.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on KWR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on KWR as the stock returned 37.2% since Q3 (through December 14th) and outperformed the market by an even larger margin.

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