The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Reliance Steel & Aluminum Co. (NYSE:RS) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Reliance Steel & Aluminum Co. (NYSE:RS) shareholders have witnessed an increase in hedge fund interest lately. Reliance Steel & Aluminum Co. (NYSE:RS) was in 27 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 34. There were 23 hedge funds in our database with RS holdings at the end of March. Our calculations also showed that RS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a multitude of methods market participants have at their disposal to appraise publicly traded companies. Some of the less known methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the S&P 500 by a very impressive amount (see the details here).
Paul Tudor Jones of Tudor Investment Corp
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Now let’s take a glance at the fresh hedge fund action encompassing Reliance Steel & Aluminum Co. (NYSE:RS).
Hedge fund activity in Reliance Steel & Aluminum Co. (NYSE:RS)
Heading into the third quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in RS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Reliance Steel & Aluminum Co. (NYSE:RS), with a stake worth $52.8 million reported as of the end of September. Trailing Royce & Associates was Millennium Management, which amassed a stake valued at $38.5 million. AQR Capital Management, Renaissance Technologies, and Balyasny Asset 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 Royce & Associates allocated the biggest weight to Reliance Steel & Aluminum Co. (NYSE:RS), around 0.58% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, designating 0.47 percent of its 13F equity portfolio to RS.
As aggregate interest increased, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable position in Reliance Steel & Aluminum Co. (NYSE:RS). Balyasny Asset Management had $15.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $9.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Greg Poole’s Echo Street Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Reliance Steel & Aluminum Co. (NYSE:RS). These stocks are Morningstar, Inc. (NASDAQ:MORN), Aegon N.V. (NYSE:AEG), CF Industries Holdings, Inc. (NYSE:CF), AECOM (NYSE:ACM), Owens Corning (NYSE:OC), Vroom, Inc. (NASDAQ:VRM), and ANGI Homeservices Inc (NASDAQ:ANGI). This group of stocks’ market caps match RS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MORN | 20 | 292962 | 7 |
| AEG | 4 | 16423 | 0 |
| CF | 37 | 547941 | 3 |
| ACM | 38 | 664429 | -1 |
| OC | 37 | 576140 | 7 |
| VRM | 28 | 310338 | 28 |
| ANGI | 48 | 667972 | 21 |
| Average | 30.3 | 439458 | 9.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $439 million. That figure was $221 million in RS’s case. ANGI Homeservices Inc (NASDAQ:ANGI) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 4 bullish hedge fund positions. Reliance Steel & Aluminum Co. (NYSE:RS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RS is 59. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. A small number of hedge funds were also right about betting on RS as the stock returned 8.7% since the end of June (through September 25th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
