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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Alcoa Corporation (NYSE:AA) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Alcoa Corporation (NYSE:AA) the right investment to pursue these days? Prominent investors are taking a bullish view. The number of bullish hedge fund bets advanced by 2 in recent months. Our calculations also showed that AA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are viewed as worthless, outdated investment vehicles of years past. While there are greater than 8000 funds in operation today, Our experts hone in on the aristocrats of this club, about 750 funds. These hedge fund managers handle most of all hedge funds’ total capital, and by keeping track of their first-class picks, Insider Monkey has discovered several investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Paul Singer of Elliott Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action regarding Alcoa Corporation (NYSE:AA).
What does smart money think about Alcoa Corporation (NYSE:AA)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AA over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Alcoa Corporation (NYSE:AA), with a stake worth $130 million reported as of the end of September. Trailing Renaissance Technologies was Orbis Investment Management, which amassed a stake valued at $126.6 million. Elliott Management, Citadel Investment Group, and Two Sigma Advisors 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 Bronson Point Partners allocated the biggest weight to Alcoa Corporation (NYSE:AA), around 4.19% of its portfolio. Elm Ridge Capital is also relatively very bullish on the stock, setting aside 3.72 percent of its 13F equity portfolio to AA.
As one would reasonably expect, some big names have been driving this bullishness. Impala Asset Management, managed by Robert Bishop, created the largest position in Alcoa Corporation (NYSE:AA). Impala Asset Management had $17.3 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $12 million investment in the stock during the quarter. The following funds were also among the new AA investors: Alexander Mitchell’s Scopus Asset Management, Paul Marshall and Ian Wace’s Marshall Wace, and Sara Nainzadeh’s Centenus Global Management.
Let’s also examine 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 Ardagh Group S.A. (NYSE:ARD), Apple Hospitality REIT Inc (NYSE:APLE), Equitrans Midstream Corporation (NYSE:ETRN), and Tech Data Corp (NASDAQ:TECD). All of these stocks’ market caps match AA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARD | 12 | 63888 | 1 |
| APLE | 12 | 106485 | -2 |
| ETRN | 16 | 334604 | 0 |
| TECD | 21 | 450204 | 3 |
| Average | 15.25 | 238795 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $239 million. That figure was $530 million in AA’s case. Tech Data Corp (NASDAQ:TECD) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Alcoa Corporation (NYSE:AA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AA were disappointed as the stock returned 1.4% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
