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In this article we will check out the progression of hedge fund sentiment towards Constellium SE (NYSE:CSTM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending 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 employ 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 CSTM stock a buy? Constellium SE (NYSE:CSTM) investors should pay attention to an increase in hedge fund interest lately. Constellium SE (NYSE:CSTM) was in 35 hedge funds' portfolios at the end of December. The all time high for this statistic is 50. Our calculations also showed that CSTM isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Robert Pohly of Samlyn Capital
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Keeping this in mind let's analyze the key hedge fund action encompassing Constellium SE (NYSE:CSTM).
Do Hedge Funds Think CSTM Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. By comparison, 50 hedge funds held shares or bullish call options in CSTM 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.
Among these funds, Sachem Head Capital held the most valuable stake in Constellium SE (NYSE:CSTM), which was worth $52.6 million at the end of the fourth quarter. On the second spot was Nut Tree Capital which amassed $50.4 million worth of shares. Samlyn Capital, Bronson Point Partners, and BeaconLight Capital 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 Nut Tree Capital allocated the biggest weight to Constellium SE (NYSE:CSTM), around 11.25% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, dishing out 9.55 percent of its 13F equity portfolio to CSTM.
As one would reasonably expect, key hedge funds were breaking ground themselves. Roubaix Capital, managed by Christopher Hillary, initiated the largest position in Constellium SE (NYSE:CSTM). Roubaix Capital had $2.2 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $1.5 million position during the quarter. The following funds were also among the new CSTM investors: Allan Teh's Kamunting Street Capital, Renaissance Technologies, and Charles Davidson and Joseph Jacobs's Wexford Capital.
Let's also examine hedge fund activity in other stocks similar to Constellium SE (NYSE:CSTM). We will take a look at Cubic Corporation (NYSE:CUB), SITE Centers Corp. (NYSE:SITC), Atkore Inc. (NYSE:ATKR), Washington Federal Inc. (NASDAQ:WAFD), Hub Group Inc (NASDAQ:HUBG), PQ Group Holdings Inc. (NYSE:PQG), and MAG Silver Corporation (NYSE:MAG). All of these stocks' market caps match CSTM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CUB,13,123362,-6 SITC,11,27974,-3 ATKR,22,109157,5 WAFD,14,71259,-2 HUBG,22,243063,2 PQG,9,49375,-4 MAG,12,126415,2 Average,14.7,107229,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $316 million in CSTM's case. Atkore Inc. (NYSE:ATKR) is the most popular stock in this table. On the other hand PQ Group Holdings Inc. (NYSE:PQG) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Constellium SE (NYSE:CSTM) is more popular among hedge funds. Our overall hedge fund sentiment score for CSTM is 81. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately CSTM wasn't nearly as popular as these 30 stocks and hedge funds that were betting on CSTM were disappointed as the stock returned 6.4% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.