Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Vale SA (ADR) (NYSE:VALE).
Vale SA (ADR) (NYSE:VALE) was in 24 hedge funds’ portfolios at the end of September. Vale SA (ADR) (NYSE:VALE) has seen an increase in support from the world’s most elite money managers in recent months. There were 22 hedge funds in our database with Vale SA (ADR) (NYSE:VALE) positions at the end of the previous quarter. At the end of this article, we will also compare Vale SA (ADR) (NYSE:VALE) to other stocks, including Symantec Corporation (NASDAQ:SYMC), NVIDIA Corporation (NASDAQ:NVDA), and FirstEnergy Corp. (NYSE:FE) to get a better sense of its popularity.
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In the financial world, there are a multitude of tools investors use to value stocks. Some of the less utilized tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can trounce their index-focused peers by a very impressive amount (see the details here).
With all of this in mind, we’re going to take a look at the new action surrounding Vale SA (ADR) (NYSE:VALE).
What does the smart money think about Vale SA (ADR) (NYSE:VALE)?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 9% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Oaktree Capital Management, managed by Howard Marks, holds the biggest position in Vale SA (ADR) (NYSE:VALE). Oaktree Capital Management has a $34.2 million position in the stock, comprising 0.5% of its 13F portfolio. On Oaktree Capital Management’s heels is Luminus Management, managed by Jonathan Barrett and Paul Segal, which holds a $22.4 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital, John Horseman’s Horseman Capital Management, and Jacob Gottlieb’s Visium Asset Management.
Now, key money managers have jumped into Vale SA (ADR) (NYSE:VALE) headfirst. Horseman Capital Management, managed by John Horseman, initiated the biggest position in Vale SA (ADR) (NYSE:VALE). Horseman Capital Management had $10.5 million invested in the company at the end of the quarter. Jacob Gottlieb’s Visium Asset Management also initiated a $9.7 million position during the quarter. The other funds with new positions in the stock are Farallon Capital, Ken Griffin’s Citadel Investment Group, and GLG Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vale SA (ADR) (NYSE:VALE) but similarly valued. We will take a look at Symantec Corporation (NASDAQ:SYMC), NVIDIA Corporation (NASDAQ:NVDA), FirstEnergy Corp. (NYSE:FE), and Workday Inc (NYSE:WDAY). This group of stocks’ market values is similar to Vale SA (ADR) (NYSE:VALE)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYMC | 38 | 753151 | 3 |
| NVDA | 34 | 456162 | 4 |
| FE | 24 | 558358 | 3 |
| WDAY | 28 | 1019376 | 2 |
As you can see, these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $697 million. That figure was $141 million in Vale SA (ADR) (NYSE:VALE)’s case. Symantec Corporation (NASDAQ:SYMC) is the most popular stock in this table. On the other hand, FirstEnergy Corp. (NYSE:FE) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks, Vale SA (ADR) (NYSE:VALE) is even less popular than FirstEnergy Corp. (NYSE:FE). 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.
