ArcelorMittal SA (ADR) (NYSE:MT) shares are 7.9% higher this morning after Bloomberg reported that some analysts are speculating that the European Commission will extend its anti-dumping probe on imports of some forms of hot-rolled coil to additional countries other than China. Analysts at RBC Capital Markets cited reports that claim other countries such as Iran, Ukraine, Brazil, Russia, and Turkey could be probed too. If the probe is indeed true, the event could improve sentiment and send steel product prices higher. ArcelorMittal SA (ADR) (NYSE:MT), as the largest steel maker in the world, would clearly be one of the largest beneficiaries of improving steel prices.
ArcelorMittal (ADR) (NYSE:MT) investors should pay attention to an increase in hedge fund interest lately. At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 31% jump from the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as D.R. Horton, Inc. (NYSE:DHI), Coach, Inc. (NYSE:COH), and Hanesbrands Inc. (NYSE:HBI) to gather more data points.
Follow Arcelormittal S A Luxembourg (NYSE:MT)
Follow Arcelormittal S A Luxembourg (NYSE:MT)
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
When looking at the institutional investors followed by Insider Monkey, Jonathan Barrett and Paul Segal’s Luminus Management has the largest position in ArcelorMittal (ADR) (NYSE:MT), worth close to $54.2 million, amounting to 1.8% of its total 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $36.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Jim Simons’ Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Christopher A. Winham’s Tide Point Capital.
On the next page we’ll look at some funds that took up positions in ArcelorMittal during Q1, as well as compare the stock to a handful of others with similar market caps.
Key money managers jumped into ArcelorMittal (ADR) (NYSE:MT) headfirst during Q1. Tide Point Capital, managed by Christopher A. Winham, assembled the largest position in ArcelorMittal (ADR) (NYSE:MT). Tide Point Capital had $18.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $14.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Larry Foley and Paul Farrell’s Bronson Point Partners, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt.
Let’s now review hedge fund activity in other stocks similar to ArcelorMittal (ADR) (NYSE:MT). These stocks are D.R. Horton, Inc. (NYSE:DHI), Coach, Inc. (NYSE:COH), Hanesbrands Inc. (NYSE:HBI), and Discovery Communications Inc. (NASDAQ:DISCK). This group of stocks’ market caps are closest to MT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DHI | 38 | 1086181 | -4 |
| COH | 37 | 656870 | 0 |
| HBI | 34 | 1065470 | -8 |
| DISCK | 22 | 317416 | -3 |
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $781 million. That figure was $235 million in MT’s case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Discovery Communications Inc. (NASDAQ:DISCK) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks ArcelorMittal (ADR) (NYSE:MT) is even less popular than DISCK. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
