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Hedge Funds Are Crazy About Cleveland-Cliffs Inc (CLF)

Abigail Fisher

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Cleveland-Cliffs Inc (NYSE:CLF).

Cleveland-Cliffs Inc (NYSE:CLF) was in 25 hedge funds' portfolios at the end of September. CLF shareholders have witnessed an increase in hedge fund interest lately. There were 23 hedge funds in our database with CLF holdings at the end of the previous quarter. Our calculations also showed that CLF isn't among the 30 most popular stocks among hedge funds.

If you'd ask most stock holders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are over 8,000 funds trading today, We look at the moguls of this club, about 700 funds. Most estimates calculate that this group of people control the lion's share of the smart money's total capital, and by keeping track of their best stock picks, Insider Monkey has unsheathed several investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by 6 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

Ken Fisher FISHER ASSET MANAGEMENT

We're going to go over the key hedge fund action surrounding Cleveland-Cliffs Inc (NYSE:CLF).

How are hedge funds trading Cleveland-Cliffs Inc (NYSE:CLF)?

Heading into the fourth quarter of 2018, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in CLF heading into this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CLF_dec2018

Among these funds, Fisher Asset Management held the most valuable stake in Cleveland-Cliffs Inc (NYSE:CLF), which was worth $108.5 million at the end of the third quarter. On the second spot was Contrarian Capital which amassed $98.5 million worth of shares. Moreover, D E Shaw, Millennium Management, and Key Square Capital Management were also bullish on Cleveland-Cliffs Inc (NYSE:CLF), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key money managers have been driving this bullishness. Fisher Asset Management, managed by Ken Fisher, assembled the biggest position in Cleveland-Cliffs Inc (NYSE:CLF). Fisher Asset Management had $108.5 million invested in the company at the end of the quarter. Ross Turner's Pelham Capital also made a $20.7 million investment in the stock during the quarter. The following funds were also among the new CLF investors: Kevin Michael Ulrich and Anthony Davis's Anchorage Advisors, Richard Driehaus's Driehaus Capital, and Paul Tudor Jones's Tudor Investment Corp.

Let's check out hedge fund activity in other stocks similar to Cleveland-Cliffs Inc (NYSE:CLF). These stocks are Endo International plc (NASDAQ:ENDP), John Bean Technologies Corporation (NYSE:JBT), United Bankshares, Inc. (NASDAQ:UBSI), and Eldorado Resorts Inc (NASDAQ:ERI). This group of stocks' market valuations match CLF's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENDP,22,774550,0 JBT,13,39442,2 UBSI,7,38546,1 ERI,24,969564,-3 Average,16.5,455526,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $456 million. That figure was $446 million in CLF's case. Eldorado Resorts Inc (NASDAQ:ERI) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Cleveland-Cliffs Inc (NYSE:CLF) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None. This article was originally published at Insider Monkey.

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