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.
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
Top Buys and Sells
Potash Corp Saskatchewan Inc.
Air Prods & Chemicals Inc.
Lyondellbasell Inds A Nv
CF Inds Hldgs Inc.
Eastman Chemicals Co.
Du Pont EI De Nemours & Co.
Kronos Worldwide Inc.
Grace W R & Co.
Top Guru Holdings
PPG Inds Inc Com
Praxair Inc Com
Other Stocks Held by Two or More Gurus
Huntsman Corp Com
Westlake Chem Corp Com
Cytec Inds Inc Com
Rockwood Hldgs Inc Com
Om Group Inc Com
Newmarket Corp Com
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.
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