Is Westlake Chemical Corporation (WLK) Going to Burn These Hedge Funds?

Is Westlake Chemical Corporation (NYSE:WLK) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Westlake Chemical Corporation (NYSE:WLK) was in 28 hedge funds’ portfolios at the end of the third quarter of 2015. Westlake Chemical Corporation (NYSE:WLKhas seen a decrease in enthusiasm from smart money recently. There were 31 hedge funds in our database with Westlake Chemical Corporation (NYSE:WLKholdings at the end of the previous quarter. 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 Garmin Ltd. (NASDAQ:GRMN), Spirit AeroSystems Holdings, Inc. (NYSE:SPR), and Envision Healthcare Holdings Inc (NYSE:EVHC) to gather more data points.

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If you’d ask most market participants, hedge funds are viewed as underperforming, old investment tools of yesteryear. While there are greater than 8000 funds trading today, our researchers choose to focus on the masters of this group, around 700 funds. These investment experts oversee most of the hedge fund industry’s total asset base, and by paying attention to their top investments, Insider Monkey has unsheathed numerous investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, we’re going to take a peek at the recent action encompassing Westlake Chemical Corporation (NYSE:WLK).

How are hedge funds trading Westlake Chemical Corporation (NYSE:WLK)?

Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 10% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Robert Joseph Caruso’s Select Equity Group has the most valuable position in Westlake Chemical Corporation (NYSE:WLK), worth close to $169.8 million, comprising 1.6% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $123.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions comprise D E Shaw, Israel Englander’s Millennium Management, and Chuck Royce’s Royce & Associates.

Because Westlake Chemical Corporation (NYSE:WLK) has experienced a declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few hedgies who sold off their positions entirely last quarter. Interestingly, Jacob Doft’s Highline Capital Management sold off the largest stake of all the hedgies monitored by Insider Monkey, totaling about $26.4 million in stock, and Lawrence Sapanski’s Scoria Capital was right behind this move, as the fund dumped about $2.4 million worth of shares. These moves are interesting, as total hedge fund interest fell by 3 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Westlake Chemical Corporation (NYSE:WLK). We will take a look at Garmin Ltd. (NASDAQ:GRMN), Spirit AeroSystems Holdings, Inc. (NYSE:SPR), Envision Healthcare Holdings Inc (NYSE:EVHC), and Harman International Industries Inc./DE/ (NYSE:HAR). This group of stocks’ market valuations is similar to Westlake Chemical Corporation (NYSE:WLK)‘s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GRMN 19 146741 -3
SPR 50 2778442 5
EVHC 32 1194040 3
HAR 27 404238 10

As you can see, these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1.13 billion. That figure was $768 million in Westlake Chemical Corporation (NYSE:WLK)‘s case. Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is the most popular stock in this table. On the other hand, Garmin Ltd. (NASDAQ:GRMN) is the least popular one with only 19 bullish hedge fund positions. Westlake Chemical Corporation (NYSE:WLK) 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, Spirit AeroSystems Holdings, Inc. (NYSE:SPR) might be a better candidate to consider a long position.