Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Olin Corporation (NYSE:OLN).
Olin Corporation (NYSE:OLN) was in 35 hedge funds’ portfolios at the end of the third quarter of 2015. OLN has seen an increase in support from the world’s most elite money managers of late. There were 24 hedge funds in our database with OLN positions 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 Shutterfly, Inc. (NASDAQ:SFLY), Talen Energy Corp (NYSE:TLN), and Premier Inc (NASDAQ:PINC) to gather more data points.
Today there are several metrics stock market investors put to use to assess stocks. A couple of the best metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the market by a healthy margin (see the details here).
Keeping this in mind, let’s take a glance at the key action regarding Olin Corporation (NYSE:OLN).
How are hedge funds trading Olin Corporation (NYSE:OLN)?
At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a surge of 46% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Seth Klarman’s Baupost Group has the largest position in Olin Corporation (NYSE:OLN), worth close to $117.7 million, corresponding to 2% of its total 13F portfolio. Sitting at the No. 2 spot is Phill Gross and Robert Atchinson of Adage Capital Management, with a $98.9 million position; 0.3% of its 13F portfolio is allocated to the company. Other peers with similar optimism comprise Jay Petschek and Steven Major’s Corsair Capital Management, Youlia Miteva’s Proxima Capital Management and Israel Englander’s Millennium Management.
As aggregate interest increased, some big names have been driving this bullishness. Baupost Group, managed by Seth Klarman, established the most valuable position in Olin Corporation (NYSE:OLN). The fund had $117.7 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also made a $19.8 million investment in the stock during the quarter. The following funds were also among the new OLN investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Lee Munder’s Lee Munder Capital Group, and Daniel S. Och’s OZ Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Olin Corporation (NYSE:OLN) but similarly valued. These stocks are Shutterfly, Inc. (NASDAQ:SFLY), Talen Energy Corp (NYSE:TLN), Premier Inc (NASDAQ:PINC), and Apollo Investment Corp. (NASDAQ:AINV). This group of stocks’ market values resemble OLN’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $486 million in OLN’s case. Shutterfly, Inc. (NASDAQ:SFLY) is the most popular stock in this table, while Premier Inc (NASDAQ:PINC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Olin Corporation (NYSE:OLN) is more popular among hedge funds and has attracted a significantly higher amount of investments. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.