Should Investors Follow Steve Cohen’s Move On This Chemical Company?

A manufacturer of chlor-alkali products, Olin Corporation (NYSE:OLN) has a market cap of $1.39 billion and pays an annual dividend of $0.80, providing shareholders with a juicy 4.40% yield. The stock has been in a steady downward spiral since the end of March and is currently down by 23.3% for the year. Second quarter revenues came in at $535 million, down by 6% year-over-year, while earnings have increased to $0.63 per share, from the $0.48 reported a year ago. Analysts’ estimates paint a rosy picture for the current quarter, with Wall Street expecting revenues to increase to $572 million, while the consensus for profits is $0.32 per share. On September 17, Olin Corporation (NYSE:OLN) announced that it got a green light from its shareholders to complete the takeover of a Dow Chemical Co (NYSE:DOW) chlor-alkali division in a deal estimated at $5 billion. The deal requires Olin to cough up $2 billion in cash, while the remaining is to be paid in common stock and other liabilities. The transaction is expected to be finalized in early October.

The recent developments at Olin have attracted the attention of the hedge fund world, with the company gaining popularity among the hedge funds that we track. The number of funds holding a long position increased from 22 to 24 during the second quarter, while the value of their holdings shot up by 64% to more than $271 million. The aforementioned Adage Capital Management has stepped up its interest recently, taking its investment in Olin to 4.31 million shares or 5.56% of the company’s outstanding stock. Israel Englander is also a fan, having boosted his stake by one-third to amass 804,362 shares, while Jay Petschek and Steven Major, the managers of Corsair Capital Management, joined the party during the second quarter, having stockpiled some 471,068 shares according to the fund’s latest 13F filing.

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