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

Olin Corporation (NYSE:OLN) is still an attractive investment for Steven Cohen or so suggests his fund’s latest filing with the Securities and Exchange Commission. Point72 Asset Management has disclosed a further increase in its holding of the stock, adding 894,539 shares to its previous stake and taking it to 4.91 million shares or 6.3% of the company’s common stock. Phill Gross and Robert Atchinson‘s Adage Capital Management are among a host of other hedge funds that are betting heavily on Olin.

A legend in the hedge fund world, Steven Cohen started as a trader in Gruntal & Co’s options arbitrage division before making the move to strike out on his own. He started SAC Capital in 1992 with an initial investment of $20 million coming out of his own pocket and grew it into a major funds manager with $14 billion in assets under management. Following charges of insider trading, SAC Capital pleaded guilty for failing to prevent insider trading and agreed to pay a $1.2 billion fine and stop managing money for investors. As a result, Cohen started Point72 Asset Management, a family office where he manages his own fortune and those of his employees and their families. His major plays include several oil and energy stocks, as well as two tech giants: Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOGL). According to its latest 13F filing, Point72 holds 536,000 shares of Amazon, up by 63% during the second quarter of 2015, while its stake in Google was increased by 313% to amass 303,800 Class A shares. The fund’s largest equity position continues to be EOG Resources Inc (NYSE:EOG), an oil and gas exploration company with a global presence. Cohen was busy buying this stock during the second quarter, ending it with 2.8 million EOG shares in his portfolio.

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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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