Is AK Steel Holding Corporation (NYSE:AKS) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
AK Steel Holding Corporation (NYSE:AKS) was in 13 hedge funds' portfolios at the end of the first quarter of 2019. AKS investors should pay attention to a decrease in enthusiasm from smart money lately. There were 15 hedge funds in our database with AKS positions at the end of the previous quarter. Our calculations also showed that AKS isn't among the 30 most popular stocks among hedge funds.
At the moment there are a large number of tools market participants use to size up stocks. Two of the most useful tools are hedge fund and insider trading indicators. 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 solid margin (see the details here).
[caption id="attachment_30576" align="aligncenter" width="501"] Glenn Russell Dubin of Highbridge Capital[/caption]
Let's take a gander at the key hedge fund action encompassing AK Steel Holding Corporation (NYSE:AKS).
How are hedge funds trading AK Steel Holding Corporation (NYSE:AKS)?
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2018. On the other hand, there were a total of 25 hedge funds with a bullish position in AKS a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in AK Steel Holding Corporation (NYSE:AKS) was held by HBK Investments, which reported holding $6.6 million worth of stock at the end of March. It was followed by DC Capital Partners with a $5.5 million position. Other investors bullish on the company included Maverick Capital, Citadel Investment Group, and Royce & Associates.
Judging by the fact that AK Steel Holding Corporation (NYSE:AKS) has faced a decline in interest from the smart money, logic holds that there lies a certain "tier" of fund managers that decided to sell off their positions entirely last quarter. At the top of the heap, Ken Griffin's Citadel Investment Group sold off the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $12.9 million in stock. Noam Gottesman's fund, GLG Partners, also sold off its stock, about $4.6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's go over hedge fund activity in other stocks similar to AK Steel Holding Corporation (NYSE:AKS). These stocks are Chase Corporation (NYSE:CCF), Tidewater Inc. (NYSE:TDW), NorthStar Realty Europe Corp. (NYSE:NRE), and Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (NYSE:EDN). All of these stocks' market caps are similar to AKS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCF,9,89059,4 TDW,15,215883,1 NRE,9,98233,-4 EDN,5,12274,-1 Average,9.5,103862,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $29 million in AKS's case. Tidewater Inc. (NYSE:TDW) is the most popular stock in this table. On the other hand Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (NYSE:EDN) is the least popular one with only 5 bullish hedge fund positions. AK Steel Holding Corporation (NYSE:AKS) 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 AKS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AKS were disappointed as the stock returned -16.7% 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.