U.S. Markets closed

Where Do Hedge Funds Stand On Nucor Corporation (NUE)?

  • Oops!
    Something went wrong.
    Please try again later.
·6 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

At Insider Monkey, we pore over the filings of nearly 873 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 30th. In this article, we will use that wealth of knowledge to determine whether or not Nucor Corporation (NYSE:NUE) makes for a good investment right now.

Is Nucor Corporation (NYSE:NUE) the right investment to pursue these days? Money managers were turning bullish. The number of long hedge fund positions went up by 7 in recent months. Nucor Corporation (NYSE:NUE) was in 32 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that NUE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Robert Atchinson of Adage Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 glance at the fresh hedge fund action regarding Nucor Corporation (NYSE:NUE).

Do Hedge Funds Think NUE Is A Good Stock To Buy Now?

At Q2's end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NUE over the last 24 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in Nucor Corporation (NYSE:NUE). Citadel Investment Group has a $73.5 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which holds a $32.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Phill Gross and Robert Atchinson's Adage Capital Management, Ken Griffin's Citadel Investment Group and Ken Fisher's Fisher Asset Management. In terms of the portfolio weights assigned to each position Arjuna Capital allocated the biggest weight to Nucor Corporation (NYSE:NUE), around 1.72% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, setting aside 0.67 percent of its 13F equity portfolio to NUE.

As aggregate interest increased, some big names were breaking ground themselves. D E Shaw, managed by D. E. Shaw, established the most outsized call position in Nucor Corporation (NYSE:NUE). D E Shaw had $12.7 million invested in the company at the end of the quarter. Todd J. Kantor's Encompass Capital Advisors also made a $9.6 million investment in the stock during the quarter. The following funds were also among the new NUE investors: Benjamin A. Smith's Laurion Capital Management, Mika Toikka's AlphaCrest Capital Management, and Louis Bacon's Moore Global Investments.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Nucor Corporation (NYSE:NUE) but similarly valued. These stocks are Seagen Inc. (NASDAQ:SGEN), The Kroger Co. (NYSE:KR), State Street Corporation (NYSE:STT), Keysight Technologies Inc (NYSE:KEYS), AMC Entertainment Holdings Inc (NYSE:AMC), Zebra Technologies Corporation (NASDAQ:ZBRA), and Verisk Analytics, Inc. (NASDAQ:VRSK). This group of stocks' market caps resemble NUE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SGEN,37,8709980,-2 KR,39,3562302,4 STT,37,1116646,5 KEYS,32,553842,0 AMC,21,404312,2 ZBRA,34,1206955,-1 VRSK,36,1738237,2 Average,33.7,2470325,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $2470 million. That figure was $196 million in NUE's case. The Kroger Co. (NYSE:KR) is the most popular stock in this table. On the other hand AMC Entertainment Holdings Inc (NYSE:AMC) is the least popular one with only 21 bullish hedge fund positions. Nucor Corporation (NYSE:NUE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NUE is 69.6. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on NUE as the stock returned 6.5% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

Get real-time email alerts: Follow Nucor Corp (NYSE:NUE)

Suggested Articles:

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