Is Quaker Chemical Corp (KWR) a Good Stock to Buy?

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Quaker Chemical Corp (NYSE:KWR) .

Quaker Chemical Corp (NYSE:KWR) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as WisdomTree Investments, Inc. (NASDAQ:WETF), Seaspan Corporation (NYSE:SSW), and GNC Holdings Inc (NYSE:GNC) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Now, we’re going to review the key action encompassing Quaker Chemical Corp (NYSE:KWR).

How have hedgies been trading Quaker Chemical Corp (NYSE:KWR)?

At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in KWR at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the largest position in Quaker Chemical Corp (NYSE:KWR). Royce & Associates has a $105.6 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, one of the biggest hedge funds in the world, holding a $18.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Cliff Asness’ AQR Capital Management, Roger Ibbotson’s Zebra Capital Management and Peter Muller’s PDT Partners. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually got rid of their positions entirely. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP got rid of the largest position of all the investors watched by Insider Monkey, valued at close to $0.7 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund said goodbye to about $0.1 million worth of shares.

Let’s now take a look at 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 WisdomTree Investments, Inc. (NASDAQ:WETF), Seaspan Corporation (NYSE:SSW), GNC Holdings Inc (NYSE:GNC), and Adecoagro SA (NYSE:AGRO). This group of stocks’ market caps resemble KWR’s market cap.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $129 million in KWR’s case. GNC Holdings Inc (NYSE:GNC) is the most popular stock in this table. On the other hand Seaspan Corporation (NYSE:SSW) is the least popular one with only 7 bullish hedge fund positions. Quaker Chemical Corp (NYSE:KWR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GNC might be a better candidate to consider taking a long position in.