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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Ramaco Resources, Inc. (NASDAQ:METC).
Ramaco Resources, Inc. (NASDAQ:METC) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that METC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare METC to other stocks including 1st Constitution Bancorp (NASDAQ:FCCY), Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI), and Genfit SA (NASDAQ:GNFT) to get a better sense of its popularity.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Phillip Gross of Adage Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's take a look at the fresh hedge fund action surrounding Ramaco Resources, Inc. (NASDAQ:METC).
Do Hedge Funds Think METC Is A Good Stock To Buy Now?
At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in METC over the last 23 quarters. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Ramaco Resources, Inc. (NASDAQ:METC) was held by Adage Capital Management, which reported holding $0.8 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $0.3 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Jasper Ridge Partners. In terms of the portfolio weights assigned to each position Jasper Ridge Partners allocated the biggest weight to Ramaco Resources, Inc. (NASDAQ:METC), around 0.0024% of its 13F portfolio. Adage Capital Management is also relatively very bullish on the stock, dishing out 0.0017 percent of its 13F equity portfolio to METC.
Seeing as Ramaco Resources, Inc. (NASDAQ:METC) has faced declining sentiment from hedge fund managers, logic holds that there exists a select few money managers that elected to cut their full holdings in the first quarter. It's worth mentioning that Nathaniel August's Mangrove Partners cut the biggest position of the 750 funds monitored by Insider Monkey, totaling an estimated $0.6 million in stock. Jay Petschek and Steven Major's fund, Corsair Capital Management, also sold off its stock, about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Ramaco Resources, Inc. (NASDAQ:METC). These stocks are 1st Constitution Bancorp (NASDAQ:FCCY), Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI), Genfit SA (NASDAQ:GNFT), Evogene Ltd. (NASDAQ:EVGN), Secoo Holding Limited (NASDAQ:SECO), Axcella Health Inc. (NASDAQ:AXLA), and Eton Pharmaceuticals, Inc. (NASDAQ:ETON). This group of stocks' market valuations are similar to METC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCCY,1,2419,-1 RMBI,2,1147,-2 GNFT,4,2552,1 EVGN,7,33056,3 SECO,6,6149,2 AXLA,2,394,-1 ETON,6,31704,1 Average,4,11060,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $1 million in METC's case. Evogene Ltd. (NASDAQ:EVGN) is the most popular stock in this table. On the other hand 1st Constitution Bancorp (NASDAQ:FCCY) is the least popular one with only 1 bullish hedge fund positions. Ramaco Resources, Inc. (NASDAQ:METC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for METC is 53.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on METC as the stock returned 29.1% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.