Smart Money Interest In Chemical Financial Corporation (CHFC) Is Waning

How do we determine whether Chemical Financial Corporation (NASDAQ:CHFC) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors. In this article, we’ll see what they have to say about Chemical Financial.


Is Chemical Financial Corporation (NASDAQ:CHFC) a splendid investment now? The best stock pickers are becoming less bullish. The number of long hedge fund bets were cut by two in recent months. CHFC was in 13 hedge funds’ portfolios at the end of the third quarter of 2015. There were 15 hedge funds in our database with CHFC positions at the end of the previous quarter.

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At the moment there are a lot of metrics that stock market investors use to value publicly-traded companies. A couple of the most innovative metrics are hedge fund and insider trading signals. Hedge fund experts at Insider Monkey have shown that, historically, those who follow the best picks of the top fund managers can trounce the S&P 500 by a superb margin (see the details here).

Now, we’re going to go over the key action surrounding Chemical Financial Corporation (NASDAQ:CHFC).

What does the smart money think about Chemical Financial Corporation (NASDAQ:CHFC)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 13% from the second quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly.

Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management had the biggest position in Chemical Financial Corporation (NASDAQ:CHFC), worth close to $20.7 million, corresponding to less than 0.1% of its total 13F portfolio. The second-largest stake is held by Sharif Siddiqui of Alpenglow Capital, with a $6 million position; the fund has 5.2% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Jim Simons’ Renaissance Technologies, Ken Gray and Steve Walsh’s Bryn Mawr Capital, and David Dreman’s Dreman Value Management.

Because Chemical Financial Corporation (NASDAQ:CHFC) has witnessed bearish sentiment from the smart money, it’s safe to say that there were a few hedgies who sold off their full holdings in the third quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the largest investment of the 700 funds watched by Insider Monkey, totaling an estimated $1.4 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also dropped its stock, about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by two funds in the third quarter.

Let’s also review hedge fund activity in other stocks similar to Chemical Financial Corporation (NASDAQ:CHFC). These stocks are Power Integrations Inc (NASDAQ:POWI), Trinseo S.A. (NYSE:TSE), Northwest Bancshares, Inc. (NASDAQ:NWBI), and Inc. (NASDAQ:STMP). This group of stocks’ market values are similar to CHFC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
POWI 13 38998 2
TSE 12 72320 -2
NWBI 8 31853 -4
STMP 27 207081 4

Elite investors are underweight CHFC, owning less than $50 million worth of its shares, equal to just 4.00% of all shares. Coupled with declining sentiment, it appears smart money is not at all optimistic about the financial holding company right now, which might partially be explained by its high price-to-sales ratio of 4.97. With the returns exhibited by the aforementioned tactics, retail investors should always pay attention to hedge fund activity, and Chemical Financial Corporation (NASDAQ:CHFC) applies perfectly to this mantra.