Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Eastman Chemical Company (NYSE:EMN) investors should be aware of a decrease in enthusiasm from smart money recently. EMN was in 37 hedge funds’ portfolios at the end of the third quarter of 2015. There were 39 hedge funds in our database with EMN positions at the end of the previous quarter. At the end of this article we will also compare EMN to other stocks including C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Autoliv Inc. (NYSE:ALV), and IMS Health Holdings Inc (NYSE:IMS) to get a better sense of its popularity.
Now, let’s check out the new action regarding Eastman Chemical Company (NYSE:EMN).
Hedge fund activity in Eastman Chemical Company (NYSE:EMN)
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management has the number one position in Eastman Chemical Company (NYSE:EMN), worth close to $362.4 million, accounting for 3.1% of its total 13F portfolio. The second largest stake is held by Ivory Capital (Investment Mgmt), managed by Curtis Macnguyen, which holds an $91.1 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Leon Cooperman’s Omega Advisors, David Tepper’s Appaloosa Management LP and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Eastman Chemical Company (NYSE:EMN) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Louis Bacon’s Moore Global Investments cut the largest position of the 700 funds monitored by Insider Monkey, valued at an estimated $20.5 million in call options. Michael Hintze’s fund, CQS Cayman LP, also sold off its call options, about $16.4 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Eastman Chemical Company (NYSE:EMN). We will take a look at C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Autoliv Inc. (NYSE:ALV), IMS Health Holdings Inc (NYSE:IMS), and Maxim Integrated Products Inc. (NASDAQ:MXIM). This group of stocks’ market valuations resemble EMN’s market valuation.
|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 22 hedge funds with bullish positions and the average amount invested in these stocks was $533 million. That figure was $1081 million in EMN’s case. IMS Health Holdings Inc (NYSE:IMS) is the most popular stock in this table. On the other hand Autoliv Inc. (NYSE:ALV) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Eastman Chemical Company (NYSE:EMN) is more popular among hedge funds. 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.