Hedge Funds Have Never Been This Bullish On Ryerson Holding Corporation (RYI)
At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Ryerson Holding Corporation (NYSE:RYI) makes for a good investment right now.
Is Ryerson Holding Corporation (NYSE:RYI) a safe investment now? Hedge funds are becoming more confident. The number of bullish hedge fund positions rose by 5 recently. Our calculations also showed that RYI isn't among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let's analyze the new hedge fund action regarding Ryerson Holding Corporation (NYSE:RYI).
What have hedge funds been doing with Ryerson Holding Corporation (NYSE:RYI)?
Heading into the third quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 45% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RYI over the last 16 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, D E Shaw was the largest shareholder of Ryerson Holding Corporation (NYSE:RYI), with a stake worth $3.4 million reported as of the end of March. Trailing D E Shaw was AQR Capital Management, which amassed a stake valued at $1.8 million. Luminus Management, Winton Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key money managers were breaking ground themselves. Renaissance Technologies initiated the biggest position in Ryerson Holding Corporation (NYSE:RYI). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter. Roger Ibbotson's Zebra Capital Management also initiated a $0.2 million position during the quarter. The following funds were also among the new RYI investors: Jonathan Soros's JS Capital, Peter Algert and Kevin Coldiron's Algert Coldiron Investors, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's check out hedge fund activity in other stocks similar to Ryerson Holding Corporation (NYSE:RYI). These stocks are Catasys, Inc. (NASDAQ:CATS), Exela Technologies, Inc. (NASDAQ:XELA), Oxford Square Capital Corp. (NASDAQ:OXSQ), and The Cato Corporation (NYSE:CATO). This group of stocks' market valuations are closest to RYI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CATS,6,7067,0 XELA,9,63939,-1 OXSQ,5,8208,-1 CATO,18,26029,6 Average,9.5,26311,1 [/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 $26 million. That figure was $10 million in RYI's case. The Cato Corporation (NYSE:CATO) is the most popular stock in this table. On the other hand Oxford Square Capital Corp. (NASDAQ:OXSQ) is the least popular one with only 5 bullish hedge fund positions. Ryerson Holding Corporation (NYSE:RYI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on RYI, though not to the same extent, as the stock returned 2.4% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
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