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The best picks of hedge fund and mutual fund gurus in the chemicals industry are Eastman Chemicals Co. (NYSE:EMN) and Grace W R & Co. (NYSE:GRA). Their best sell ideas in the group are Potash Corp. of Saskatchewan Inc. (NYSE:POT), Airgas Inc. (NYSE:ARG) and Du Pont EI De Nemours & Co. (NYSE:DD).

What are the top new buy and sell ideas of hedge fund and mutual fund gurus in the chemicals industry? In this article, through research of the latest available institutional 13-F and 13-D/G (5% ownership) filings-- as recent as ten days old-- we identify the stocks in this group that were most bought and sold by a select group of less than 100 gurus. This select list represents less than one-half of one percent of the total number of U.S. equity investment funds, but together the gurus control almost ten percent of total U.S. equity discretionary fund assets. The credentials of each guru that justify their inclusion in this elite group were detailed in our previous articles, many of which can be accessed by clicking on the hyperlinks referencing the gurus in this article.

The savvy investor may consider leveraging this information either as a starting point to conduct his own due diligence or even go as far as constructing a model diversified portfolio based on the guru best picks. The argument is that institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When guru institutional investors invest and maybe even converge on a specific investment idea, by virtue of their fund performance, low volatility and elite reputation in the investment community, the idea deserves consideration for further investigation.

This series is a follow-up to our previous series that identified top guru holdings by industry group. It updates that information for the most recent quarter, and identifies the stocks in the group most bought and sold by gurus during the quarter, their top holdings in the group, and the number of guru funds that hold the stock. Based on this analysis, we determined that guru funds are equal-weight in the chemical industry. The following are their top buys, sells and holdings:

  • Potash Corporation of Saskatchewan, Inc. (POT) is the world's largest integrated fertilizer and related industrial and feed products company by capacity. Potash is 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. Guru funds sold aggressively out of this fertilizer company, cutting a net $1.24 billion from its $1.75 billion prior quarter position. Thirteen guru funds sold their positions and only two added to it. The largest sellers were Viking Global Investors LP ($206 million), York Capital Management Global Advisors LLC ($197 million), Third Point LLC ($183 million), Perry Corp. ($177 million), Capital Growth Management LP ($128 million), Shumway Capital Partners LLC ($109 million), First Eagle Investment Management LLC ($79 million), Greenlight Capital Inc. ($67 million), SAC Capital Advisors LP ($51 million), Eton Park Capital Management LP ($44 million) and Kingdon Capital Management LLC ($31 million). The only significant buyer of POT during the quarter was Zweig-DiMenna Associates ($26 million).

  • Airgas Inc. (ARG) distributes industrial, medical and specialty gases and welding, safety and other related products. The company offers various gases, including nitrogen, oxygen, argon, helium, and hydrogen; welding and fuel gases, such as acetylene, propylene, and propane; and carbon dioxide, nitrous oxide, ultra high purity grades, special application blends, and process chemicals. Its hard-goods products comprise welding consumables and equipment, safety products, and construction supplies, as well as maintenance, repair, and operating supplies. Guru funds sold aggressively out of this fertilizer company, cutting a net $210 million from its $425 million prior quarter position. Nine guru funds sold their positions and only one added to it. The nine sellers were Eton Park Capital Management LP ($124 million), York Capital Management Global Advisors ($100 million), Third Point LLC ($27 million), Shumway Capital Partners LLC ($22 million), First Eagle Investment Management LLC ($16 million), Perry Corp. ($11 million), MFP Investors LLC ($8 million), GAMCO Investors ($5 million) and Balyasny Asset Management LLC ($3 million). The only buyer was SAC Capital Advisors LP ($22 million).

  • Eastman Chemical Co. (EMN) manufactures specialty polymers, polyethylene, intermediate chemicals and adhesives for consumer and industrial markets. Five guru funds aggressively bought $100 million during the quarter, adding it to their prior $267 million position in the company; none sold it during the quarter. The five buyers were First Eagle Investment Management LLC ($59 million), Kingdon Capital Management LLC ($17 million), Zweig-DiMenna Associates ($13 million), SAC Capital Advisors LP ($8 million) and Balyasny Asset Management LLC ($3.5 million).

  • DuPont E I De Nemours & Co (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. Guru funds together are bearish on this company, selling a net $69 million from their $172 million prior quarter position, and thus holding only 0.2% of the outstanding shares of this company. The major sellers were Snow Capital Management LP ($66 million), Zweig-DiMenna Associates ($6 million), First Eagle Investment Management LLC ($5 million) and Hillman Capital Management Inc. ($3 million).

  • Grace W R & Co. (GRA) manufactures catalysts, silica-based materials and specialty construction chemicals and building materials. Three guru funds aggressively bought $82 million during the quarter, adding it to their $167 million prior quarter position. The three buyers were York Capital Management Global Advisors LLC ($77 million), Atlantic Investment Management ($4.5 million) and SAC Capital Advisors LP ($0.5 million). The only seller was Keeley Asset Management Corp ($3 million).

  • Chemtura Corp. (NYSE:CHMT) manufactures a variety of polymer and specialty chemical products for agriculture, automobile and construction markets. Six guru funds aggressively bought $58 million during the March quarter, adding to their $154 million prior quarter position. The six buyers were York Capital Management Global Advisors ($21 million), Keeley Asset Management Corp ($18 million), Kingdon Capital Management LLC ($8 million), SAC Capital Advisors LP ($7 million) and Royce & Associates LLC ($3 million). However, subsequent to the end of the quarter, York filed a 13-G indicating the closing out of its $120 million position in CHMT, so that cumulatively now it sold a net $63 million of CHMT.

Table

Company

Ticker

Market Value of Guru Holdings

Guru New Buys

Guru New Sells

Number of Gurus in Stock

13-G Filing Since End of March 2011 Quarter

Chemtura Corp Com New

CHMT

$211 million

$58 million

($121) million

6

Top Buys and Sells

Potash Corp Saskatchewan Inc.

POT

$504 million

$28 million

($1.27) billion

9

Air Prods & Chemicals Inc.

APD

$215 million

$85 million

($295) million

5

Airgas Inc.

ARG

$300 million

$22 million

($315) million

3

Lyondellbasell Inds A Nv

LYB

$866 million

$178 million

($118) million

10

Lubrizol Corp.

LZ

$307 million

$163 million

($24) million

6

CF Inds Hldgs Inc.

CF

$167 million

$51 million

($122) million

6

Ashland Inc.

ASH

$185 million

$80 million

($33) million

6

Eastman Chemicals Co.

EMN

$367 million

$101 million

($0) million

7

Valspar Corp.

VAL

$29 million

$0 million

($98) million

1

Du Pont EI De Nemours & Co.

DD

$103 million

$10 million

($79) million

12

Kronos Worldwide Inc.

KRO

$68 million

$6 million

($82) million

5

Grace W R & Co.

GRA

$245 million

$82 million

($3) million

4

Albemarle Corp.

ALB

$64 million

$16 million

($67) million

5

Top Guru Holdings

PPG Inds Inc Com

PPG

$608 million

$5 million

$0 million

2

Praxair Inc Com

PX

$513 million

$0 million

($4) million

5

Other Stocks Held by Two or More Gurus

Huntsman Corp Com

HUN

$43 million

$5 million

($11) million

6

Westlake Chem Corp Com

WLK

$268 million

$13 million

($36) million

5

Cytec Inds Inc Com

CYT

$115 million

$9 million

($0) million

5

Rockwood Hldgs Inc Com

ROC

$69 million

$23 million

($43) million

5

Om Group Inc Com

OMG

$41 million

$2 million

($0) million

5

Newmarket Corp Com

NEU

$18 million

$1 million

($1) million

5

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, 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 our ‘opinions’ and we may be wrong. We 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 our 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 Industry Picks by Hedge Fund and Mutual Fund Gurus