Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Companhia Siderurgica Nacional (NYSE:SID) in this article.
Is SID a good stock to buy now? Companhia Siderurgica Nacional (NYSE:SID) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that SID isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare SID to other stocks including Acuity Brands, Inc. (NYSE:AYI), Virgin Galactic Holdings, Inc. (NYSE:SPCE), and Wingstop Inc (NASDAQ:WING) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a multitude of signals stock market investors can use to grade stocks. A couple of the most underrated signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outperform the S&P 500 by a very impressive amount (see the details here).
Ken Heebner of Capital Growth Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with 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. With all of this in mind let's review the key hedge fund action surrounding Companhia Siderurgica Nacional (NYSE:SID).
What have hedge funds been doing with Companhia Siderurgica Nacional (NYSE:SID)?
At Q3's end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 7 hedge funds with a bullish position in SID a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Capital Growth Management, managed by Ken Heebner, holds the largest position in Companhia Siderurgica Nacional (NYSE:SID). Capital Growth Management has a $27.6 million position in the stock, comprising 2.9% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $4.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Israel Englander's Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Companhia Siderurgica Nacional (NYSE:SID), around 2.89% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, designating 0.0028 percent of its 13F equity portfolio to SID.
Due to the fact that Companhia Siderurgica Nacional (NYSE:SID) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of hedgies that elected to cut their full holdings heading into Q4. It's worth mentioning that John Overdeck and David Siegel's Two Sigma Advisors dumped the biggest position of the "upper crust" of funds followed by Insider Monkey, worth about $0.2 million in stock, and Bruce Kovner's Caxton Associates LP was right behind this move, as the fund cut 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 also examine hedge fund activity in other stocks - not necessarily in the same industry as Companhia Siderurgica Nacional (NYSE:SID) but similarly valued. We will take a look at Acuity Brands, Inc. (NYSE:AYI), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Wingstop Inc (NASDAQ:WING), Medallia, Inc. (NYSE:MDLA), IDACORP Inc (NYSE:IDA), LendingTree, Inc (NASDAQ:TREE), and Cullen/Frost Bankers, Inc. (NYSE:CFR). All of these stocks' market caps match SID's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AYI,38,836103,0 SPCE,24,76924,2 WING,32,365263,4 MDLA,24,382834,6 IDA,31,227986,9 TREE,20,68556,5 CFR,19,39453,6 Average,26.9,285303,4.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $35 million in SID's case. Acuity Brands, Inc. (NYSE:AYI) is the most popular stock in this table. On the other hand Cullen/Frost Bankers, Inc. (NYSE:CFR) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Companhia Siderurgica Nacional (NYSE:SID) is even less popular than CFR. Our overall hedge fund sentiment score for SID is 26. 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. Hedge funds clearly dropped the ball on SID as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on SID as the stock returned 56.1% since Q3 (through December 2nd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.