A number of hedge fund managers are grabbing up shares of LyondellBasell Industries, which produces chemicals like polyethylene and propylene, both of which are the materials that go into making plastics. Propylene is a molded plastic that is used in producing clothing, rope, car parts and numerous other common products. Polyethylene is the most common plastic, used in a wide array of products from bulletproof vests to shopping bags.
Plastics and raw materials are growing in popularity, suggesting that hedge funds are diversifying commodity bets beyond gold, the sweetheart of 2010 returning 30%, as inflationary pressures ooze into energy and food. It seems that investors are looking for commodity-related plays as the global economy surfaces from the recession, because of the bets that major hedge funds are making on LyondellBasell and other raw materials manufactures like Penn West Petroleum and Repsol YPF SA.
In 2009, LyondellBasell declared bankruptcy as a result of the struggling economy. They are the third largest chemical maker in the United States. York Capital Management, Greenlight Capital, Viking Global Investors, and Farallon Capital Management made their stakes in LyondellBasell public when the chemical manufacturer returned to the public markets last October.
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