The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Alcoa Corporation (NYSE:AA).
Hedge fund interest in Alcoa Corporation (NYSE:AA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare AA to other stocks including Mirati Therapeutics, Inc. (NASDAQ:MRTX), West Fraser Timber Co. Ltd. (NYSE:WFG), and XPO Logistics Inc (NYSE:XPO) to get a better sense of its popularity.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a glance at the key hedge fund action regarding Alcoa Corporation (NYSE:AA).
Do Hedge Funds Think AA Is A Good Stock To Buy Now?
At third quarter’s end, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in AA a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Alcoa Corporation (NYSE:AA), with a stake worth $314.8 million reported as of the end of September. Trailing Fisher Asset Management was Theleme Partners, which amassed a stake valued at $240.2 million. Orbis Investment Management, Citadel Investment Group, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Value Star Asset Management allocated the biggest weight to Alcoa Corporation (NYSE:AA), around 20.11% of its 13F portfolio. Elm Ridge Capital is also relatively very bullish on the stock, earmarking 7.41 percent of its 13F equity portfolio to AA.
Due to the fact that Alcoa Corporation (NYSE:AA) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies that slashed their entire stakes in the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $19.4 million in call options. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also sold off its call options, about $18.4 million worth. These transactions are intriguing to say the least, as total 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 Alcoa Corporation (NYSE:AA). These stocks are Mirati Therapeutics, Inc. (NASDAQ:MRTX), West Fraser Timber Co. Ltd. (NYSE:WFG), XPO Logistics Inc (NYSE:XPO), Tempur Sealy International Inc. (NYSE:TPX), Concentrix Corporation (NASDAQ:CNXC), AECOM (NYSE:ACM), and Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN). This group of stocks’ market values are closest to AA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRTX | 46 | 2796323 | -9 |
| WFG | 22 | 513697 | -3 |
| XPO | 49 | 1833910 | -8 |
| TPX | 37 | 1299293 | 2 |
| CNXC | 21 | 586853 | 0 |
| ACM | 39 | 783809 | 7 |
| BHVN | 33 | 1063983 | 6 |
| Average | 35.3 | 1268267 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $1268 million. That figure was $1746 million in AA’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand Concentrix Corporation (NASDAQ:CNXC) is the least popular one with only 21 bullish hedge fund positions. Alcoa Corporation (NYSE:AA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AA is 74.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately AA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AA were disappointed as the stock returned -4.7% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
