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Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is Westlake Chemical Corporation (NYSE:WLK) undervalued? Investors who are in the know are betting on the stock. The number of long hedge fund positions inched up by 2 recently. Our calculations also showed that WLK isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a peek at the latest hedge fund action regarding Westlake Chemical Corporation (NYSE:WLK).
What have hedge funds been doing with Westlake Chemical Corporation (NYSE:WLK)?
At Q1's end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. By comparison, 32 hedge funds held shares or bullish call options in WLK a year ago. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Westlake Chemical Corporation (NYSE:WLK) was held by Millennium Management, which reported holding $73.1 million worth of stock at the end of March. It was followed by Holocene Advisors with a $59 million position. Other investors bullish on the company included Citadel Investment Group, AQR Capital Management, and Point72 Asset Management.