Is Century Aluminum Co (CENX) A Good Stock To Buy?

Abigail Fisher

Sat, Jun 29, 2019, 8:10 PM

Is Century Aluminum Co (NASDAQ:CENX) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing 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 have 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.

Is Century Aluminum Co (NASDAQ:CENX) going to take off soon? The best stock pickers are buying. The number of bullish hedge fund bets went up by 1 lately. Our calculations also showed that CENX isn't among the 30 most popular stocks among hedge funds.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 check out the recent hedge fund action encompassing Century Aluminum Co (NASDAQ:CENX).

How are hedge funds trading Century Aluminum Co (NASDAQ:CENX)?

At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CENX over the last 15 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Century Aluminum Co (NASDAQ:CENX). Fisher Asset Management has a $10.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $9.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Chuck Royce's Royce & Associates, Louis Bacon's Moore Global Investments and Ron Gutfleish's Elm Ridge Capital.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Century Aluminum Co (NASDAQ:CENX) headfirst. Moore Global Investments, managed by Louis Bacon, assembled the most valuable position in Century Aluminum Co (NASDAQ:CENX). Moore Global Investments had $3.1 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also made a $1.3 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding's Winton Capital Management, Sara Nainzadeh's Centenus Global Management, and D. E. Shaw's D E Shaw.

Let's check out hedge fund activity in other stocks similar to Century Aluminum Co (NASDAQ:CENX). We will take a look at Huami Corporation (NYSE:HMI), Argan, Inc. (NYSE:AGX), SP Plus Corp (NASDAQ:SP), and Duluth Holdings Inc. (NASDAQ:DLTH). This group of stocks' market values are similar to CENX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMI,4,7550,0 AGX,12,123440,-1 SP,14,102342,2 DLTH,12,10556,4 Average,10.5,60972,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $37 million in CENX's case. SP Plus Corp (NASDAQ:SP) is the most popular stock in this table. On the other hand Huami Corporation (NYSE:HMI) is the least popular one with only 4 bullish hedge fund positions. Century Aluminum Co (NASDAQ:CENX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CENX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CENX were disappointed as the stock returned -26.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

Disclosure: None. This article was originally published at Insider Monkey.

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