A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on SunCoke Energy, Inc (NYSE:SXC).
Is SXC a good stock to buy now? Hedge fund interest in SunCoke Energy, Inc (NYSE:SXC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SXC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare SXC to other stocks including Digimarc Corp (NASDAQ:DMRC), Paysign, Inc. (NASDAQ:PAYS), and TravelCenters of America Inc. (NASDAQ:TA) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of indicators stock traders employ to size up their holdings. Two of the most under-the-radar indicators are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outperform the S&P 500 by a very impressive amount (see the details here).
Jeffrey Gendell of Tontine Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we're going to take a look at the recent hedge fund action surrounding SunCoke Energy, Inc (NYSE:SXC).
Do Hedge Funds Think SXC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in SXC over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Mangrove Partners was the largest shareholder of SunCoke Energy, Inc (NYSE:SXC), with a stake worth $17.3 million reported as of the end of September. Trailing Mangrove Partners was Renaissance Technologies, which amassed a stake valued at $15.9 million. Nokomis Capital, Contrarius Investment Management, and Tontine Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nokomis Capital allocated the biggest weight to SunCoke Energy, Inc (NYSE:SXC), around 2.97% of its 13F portfolio. Mangrove Partners is also relatively very bullish on the stock, setting aside 2.19 percent of its 13F equity portfolio to SXC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: ExodusPoint Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was GLG Partners).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as SunCoke Energy, Inc (NYSE:SXC) but similarly valued. These stocks are Digimarc Corp (NASDAQ:DMRC), Paysign, Inc. (NASDAQ:PAYS), TravelCenters of America Inc. (NASDAQ:TA), Microvision, Inc. (NASDAQ:MVIS), Citizens, Inc. (NYSE:CIA), Oppenheimer Holdings Inc. (NYSE:OPY), and Powell Industries, Inc. (NASDAQ:POWL). This group of stocks' market caps are similar to SXC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DMRC,6,26173,-1 PAYS,5,9896,0 TA,12,62213,5 MVIS,2,237,0 CIA,2,2160,0 OPY,10,20369,2 POWL,13,27224,0 Average,7.1,21182,0.9 [/table]
As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $61 million in SXC's case. Powell Industries, Inc. (NASDAQ:POWL) is the most popular stock in this table. On the other hand Microvision, Inc. (NASDAQ:MVIS) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks SunCoke Energy, Inc (NYSE:SXC) is more popular among hedge funds. Our overall hedge fund sentiment score for SXC is 71.3. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on SXC as the stock returned 46.4% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
