Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Alcoa Corporation (NYSE:AA) based on that data.
Alcoa Corporation (NYSE:AA) investors should be aware of an increase in activity from the world’s largest hedge funds lately. Alcoa Corporation (NYSE:AA) was in 44 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 46. There were 38 hedge funds in our database with AA holdings at the end of March. Our calculations also showed that AA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
William Gray of Orbis Investment Management
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Do Hedge Funds Think AA Is A Good Stock To Buy Now?
At the end of June, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AA over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping 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 $242.7 million reported as of the end of June. Trailing Fisher Asset Management was Orbis Investment Management, which amassed a stake valued at $218.4 million. Millennium Management, Two Sigma Advisors, and Renaissance Technologies 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 Elm Ridge Capital allocated the biggest weight to Alcoa Corporation (NYSE:AA), around 7.3% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, earmarking 5.17 percent of its 13F equity portfolio to AA.
As aggregate interest increased, some big names have jumped into Alcoa Corporation (NYSE:AA) headfirst. Impala Asset Management, managed by Robert Bishop, initiated the biggest position in Alcoa Corporation (NYSE:AA). Impala Asset Management had $38.3 million invested in the company at the end of the quarter. Ken Heebner’s Capital Growth Management also made a $21 million investment in the stock during the quarter. The other funds with brand new AA positions are Dmitry Balyasny’s Balyasny Asset Management, Benjamin A. Smith’s Laurion Capital Management, and Louis Bacon’s Moore Global Investments.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Alcoa Corporation (NYSE:AA) but similarly valued. We will take a look at Dada Nexus Limited (NASDAQ:DADA), Silicon Laboratories (NASDAQ:SLAB), Sotera Health Company (NASDAQ:SHC), First American Financial Corp (NYSE:FAF), ANGI Homeservices Inc (NASDAQ:ANGI), Stifel Financial Corp. (NYSE:SF), and Marriott Vacations Worldwide Corporation (NYSE:VAC). All of these stocks’ market caps are similar to AA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DADA | 18 | 160572 | -3 |
| SLAB | 15 | 283453 | -3 |
| SHC | 18 | 437692 | -18 |
| FAF | 31 | 1224925 | -1 |
| ANGI | 26 | 313560 | -9 |
| SF | 24 | 416826 | 9 |
| VAC | 35 | 748154 | 11 |
| Average | 23.9 | 512169 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $512 million. That figure was $1156 million in AA’s case. Marriott Vacations Worldwide Corporation (NYSE:VAC) is the most popular stock in this table. On the other hand Silicon Laboratories (NASDAQ:SLAB) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Alcoa Corporation (NYSE:AA) is more popular among hedge funds. Our overall hedge fund sentiment score for AA is 88.7. 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 returned 22.9% in 2021 through October 1st but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on AA as the stock returned 35.1% since the end of June (through 10/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
