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What do the top Hedge Fund Gurus like in the chemicals Industry? This article, the sixth in a series, identifies through a research of the latest available institutional 13-F filings the Gurus that are most invested in the Chemicals Industry, and the specific Chemicals companies which they prefer to hold in their hedge fund portfolios. The first five articles in the series identified gurus that are over-weight in the solar sector, utilities sector, china stocks, airline sector, and the optical networking sector, and the stocks within those sectors that they hold in their portfolios (For those familiar with the series, skip over to the fifth paragraph).

A guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as Gurus including long-term performance, low portfolio volatility and an elite reputation in the investment community.

Many of us are familiar with leading investors and hedge fund managers such as Warren Buffet, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called Gurus.

The study of the investing habits of gurus can be informative as these are very savvy, well-respected investors with high personal net worth deploying large sums of capital from their funds on a regular basis. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.

The total capitalization of the U.S. equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading optical networking stocks is approximately $420 billion or 2.8% of the overall market. The table lists five investment gurus whose funds have invested over one-and-a-half times the average or 4.2% in the chemicals industry, and the following is a list of their picks in that industry:

  • Potash Corporation of Saskatchewan, Inc. (NYSE:POT) is the world’s largest integrated fertilizer and related industrial and feed products company by capacity. They are the largest producer of potash worldwide by capacity, the third largest producer of phosphates worldwide by capacity, and the third largest nitrogen producer worldwide by ammonia capacity.
  • The Mosaic Company (NYSE:MOS) is one of the world’s leading producers and marketers of concentrated phosphate and potash crop nutrients for the global agriculture industry.
  • Dow Chemical Co. (NYSE:DOW) is engaged in the manufacture and sale of chemicals, plastic materials, agricultural products and services, advanced materials and other specialized products and services.
  • DuPont E I De Nemours & Co (NYSE:DD) is a world leader in science and innovation across a range of disciplines, including agriculture and industrial biotechnology, chemistry, biology, materials science and manufacturing. They offer a wide range of innovative products and services for markets including agriculture and food, building and construction, electronics and communications, general industrial, and transportation.
  • Ashland Inc. (NYSE:ASH) is a provider of chemicals, plastics, automotive oil and specialty chemicals and also supplies water treatment solutions.
  • Rockwood Holdings, Inc. (NYSE:ROC) is a global developer, manufacturer and marketer of high value-added specialty chemicals and advanced materials used for industrial and commercial purposes. It is focused on surface treatment and lithium chemicals; advanced ceramics, titanium dioxide pigments, iron-oxide pigments, timber-treatment chemicals and clay-based additives.
  • Georgia Gulf Corporation (GGC) is a leading North American manufacturer and international marketer of chemicals and building products, including two product groups, (1) Electrovinyls products, which are composed of chlorine, caustic soda, ethylene dichloride ("EDC"), vinyl chloride monomer ("VCM"), and vinyl resins and (2) Compound products, which are composed of vinyl compounds, compound additives and plasticizers.
  • Kronos Worldwide, Inc. (NYSE:KRO) is a leading global producer and marketer of value-added titanium dioxide pigments ("TiO2"), a base industrial product used in a wide range of applications.
  • Kraton Performance Polymers, Inc. (NYSE:KRA) is the world’s leading producer of styrenic block copolymers that are used to enhance the performance of numerous end use products, imparting greater flexibility, resilience, strength, durability and processability.
  • OM Group, Inc. (NYSE:OMG) is a global solutions provider of specialty chemicals, advanced materials, and electrochemical energy storage.

Table

Fund and Guru

Type of Fund

Assets Under Management

Percent Portfolio in Chinese Stocks

Major chemical company positions in Portfolio

Woodbine Capital Advisors LP (Josh Berkowitz)

Hedge Fund – Global Macro

$ 440 million

9.4%

DOW, GGC

Third Point LLC (Daniel Loeb)

Hedge Fund – Shareholder Activist

$2.1 billion

8.7%

POT

Kingdon Capital Management LLC (Mark Kingdon)

Hedge Fund – GARP

$2.9 billion

4.9%

POT, ROC, MOS, KRO, ASH, KRA, GGC

Hillman Capital Management, Inc. (Mark Hillman)

Asset Manager including Mutual Funds

$450 million

4.8%

DD

Caxton Associates LP (Bruce Kovner)

Hedge Fund – Multi-strategy

$ 3.6 billion

4.7%

POT, ROC, DD, MOS, OMG, DOW

Hedge fund Woodbine Capital Advisors was founded by Soros Fund Management alumni Josh Berkowitz and Marcel Kasumovich in 2009, and uses a global macro strategy to make its investments.

Hedge Fund Third Point LLC, founded by Daniel Loeb, is a shareholder activist, meaning that they take large stakes in target investments and then use their influence resulting from the ownership to effect change at these companies, with the objective of eventually selling them for a tidy profit.

Hedge fund Kingdon Capital Management, with $2.9 billion AUM, all in equities, was founded in 1983 by President Mark Kingdon, and is growth-focused employed a growth at a reasonable price approach to investing.

Bethesda, Maryland-based Hillman Capital Management, headed by Guru Mark Hillman is a value manager, and invests in out-of-favor companies that have quantitative competitive advantages, and whose value is not yet factored into the market.

Hedge Fund Caxton Associates, headed by Bruce Kovner, uses a multi-strategy approach to investing in the markets, including global macro and other strategies,

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix by Edgar Online, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: Top Chemicals Picks by Hedge Fund Gurus