Were Expert Investors Right About Eastman Chemical Company (EMN)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Eastman Chemical Company (NYSE:EMN) based on that data and determine whether they were really smart about the stock.

Is Eastman Chemical Company (NYSE:EMN) going to take off soon? The best stock pickers were getting more bullish. The number of long hedge fund positions inched up by 3 in recent months. Eastman Chemical Company (NYSE:EMN) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that EMN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to check out the new hedge fund action encompassing Eastman Chemical Company (NYSE:EMN).

Do Hedge Funds Think EMN Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards EMN over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is EMN A Good Stock To Buy?

More specifically, Millennium Management was the largest shareholder of Eastman Chemical Company (NYSE:EMN), with a stake worth $72.2 million reported as of the end of September. Trailing Millennium Management was AQR Capital Management, which amassed a stake valued at $30.4 million. Citadel Investment Group, Ancora Advisors, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to Eastman Chemical Company (NYSE:EMN), around 3.38% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, dishing out 1.18 percent of its 13F equity portfolio to EMN.

Consequently, key hedge funds were leading the bulls’ herd. Renaissance Technologies, established the most outsized position in Eastman Chemical Company (NYSE:EMN). Renaissance Technologies had $20.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $4.7 million investment in the stock during the quarter. The following funds were also among the new EMN investors: Israel Englander’s Millennium Management, Robert Vincent McHugh’s Jade Capital Advisors, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now review hedge fund activity in other stocks similar to Eastman Chemical Company (NYSE:EMN). We will take a look at Elastic N.V. (NYSE:ESTC), Leidos Holdings Inc (NYSE:LDOS), The Mosaic Company (NYSE:MOS), Vail Resorts, Inc. (NYSE:MTN), Suzano S.A. (NYSE:SUZ), GameStop Corp. (NYSE:GME), and Howmet Aerospace Inc. (NYSE:HWM). This group of stocks’ market valuations match EMN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ESTC 59 2985926 4
LDOS 14 206379 -8
MOS 40 912653 -3
MTN 40 644916 0
SUZ 6 47280 2
GME 9 80933 -9
HWM 44 3495496 -3
Average 30.3 1196226 -2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1196 million. That figure was $255 million in EMN’s case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 6 bullish hedge fund positions. Eastman Chemical Company (NYSE:EMN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EMN is 53.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on EMN as the stock returned 18.8% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.