Hedge Funds Are Dumping AK Steel Holding Corporation (AKS)
Nina Todic
We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like AK Steel Holding Corporation (NYSE:AKS).
AK Steel Holding Corporation (NYSE:AKS) has seen a decrease in enthusiasm from smart money in recent months. Our calculations also showed that AKS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are tons of metrics stock market investors put to use to grade publicly traded companies. A couple of the most innovative metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the S&P 500 by a very impressive amount (see the details here).
Joel Greenblatt of Gotham Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to view the fresh hedge fund action encompassing AK Steel Holding Corporation (NYSE:AKS).
What have hedge funds been doing with AK Steel Holding Corporation (NYSE:AKS)?
Heading into the fourth quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AKS over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies holds the biggest position in AK Steel Holding Corporation (NYSE:AKS). Renaissance Technologies has a $11.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Douglas Dethy of DC Capital Partners, with a $4.5 million position; the fund has 4% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Joel Greenblatt's Gotham Asset Management, Ken Griffin's Citadel Investment Group and Clint Carlson's Carlson Capital. In terms of the portfolio weights assigned to each position DC Capital Partners allocated the biggest weight to AK Steel Holding Corporation (NYSE:AKS), around 3.98% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to AKS.
Judging by the fact that AK Steel Holding Corporation (NYSE:AKS) has experienced a decline in interest from hedge fund managers, it's safe to say that there is a sect of hedgies who sold off their full holdings by the end of the third quarter. Interestingly, Steve Cohen's Point72 Asset Management dumped the biggest position of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $5.5 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also cut its stock, about $1.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as AK Steel Holding Corporation (NYSE:AKS) but similarly valued. These stocks are Costamare Inc (NYSE:CMRE), Target Hospitality Corp. (NASDAQ:TH), Endo International plc (NASDAQ:ENDP), and AdvanSix Inc. (NYSE:ASIX). This group of stocks' market caps are closest to AKS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMRE,11,26252,1 TH,20,63509,3 ENDP,19,208550,-2 ASIX,10,114711,-5 Average,15,103256,-0.75 [/table]
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $27 million in AKS's case. Target Hospitality Corp. (NASDAQ:TH) is the most popular stock in this table. On the other hand AdvanSix Inc. (NYSE:ASIX) is the least popular one with only 10 bullish hedge fund positions. AK Steel Holding Corporation (NYSE:AKS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on AKS as the stock returned 21.6% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
