Hedge Funds Are Betting On Sociedad Quimica y Minera (SQM)
In this article we will check out the progression of hedge fund sentiment towards Sociedad Quimica y Minera (NYSE:SQM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Sociedad Quimica y Minera (NYSE:SQM) investors should be aware of an increase in enthusiasm from smart money recently. Sociedad Quimica y Minera (NYSE:SQM) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 20. There were 14 hedge funds in our database with SQM positions at the end of the fourth quarter. Our calculations also showed that SQM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Anna Nikolayevsky of Axel Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to take a gander at the latest hedge fund action surrounding Sociedad Quimica y Minera (NYSE:SQM).
Do Hedge Funds Think SQM Is A Good Stock To Buy Now?
At first quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SQM over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Sociedad Quimica y Minera (NYSE:SQM). Citadel Investment Group has a $38.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Paul Marshall and Ian Wace of Marshall Wace LLP, with a $17.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include Anna Nikolayevsky's Axel Capital Management, MacKenzie B. Davis and Kenneth L. Settles Jr's SailingStone Capital Partners and Renaissance Technologies. In terms of the portfolio weights assigned to each position Axel Capital Management allocated the biggest weight to Sociedad Quimica y Minera (NYSE:SQM), around 6.87% of its 13F portfolio. SailingStone Capital Partners is also relatively very bullish on the stock, dishing out 3.24 percent of its 13F equity portfolio to SQM.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Renaissance Technologies, created the biggest position in Sociedad Quimica y Minera (NYSE:SQM). Renaissance Technologies had $12.4 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson's Adage Capital Management also initiated a $10.6 million position during the quarter. The other funds with new positions in the stock are Michael Cowley's Sandbar Asset Management, Paul Marshall and Ian Wace's Marshall Wace LLP, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's now review hedge fund activity in other stocks similar to Sociedad Quimica y Minera (NYSE:SQM). We will take a look at Howmet Aerospace Inc. (NYSE:HWM), Elanco Animal Health Incorporated (NYSE:ELAN), Pool Corporation (NASDAQ:POOL), PulteGroup, Inc. (NYSE:PHM), The J.M. Smucker Company (NYSE:SJM), Whirlpool Corporation (NYSE:WHR), and Tata Motors Limited (NYSE:TTM). This group of stocks' market valuations resemble SQM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HWM,51,3959776,2 ELAN,42,1710158,-1 POOL,41,1014649,8 PHM,42,1050252,2 SJM,33,689844,-1 WHR,28,1255044,-4 TTM,8,67734,1 Average,35,1392494,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1392 million. That figure was $142 million in SQM's case. Howmet Aerospace Inc. (NYSE:HWM) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 8 bullish hedge fund positions. Sociedad Quimica y Minera (NYSE:SQM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SQM is 40.3. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately SQM wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SQM investors were disappointed as the stock returned -10.3% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
