We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of ArcelorMittal (NYSE:MT) based on that data.
Is ArcelorMittal (NYSE:MT) a buy right now? Investors who are in the know are taking a bearish view. The number of long hedge fund positions were cut by 1 recently. Our calculations also showed that MT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MT was in 14 hedge funds’ portfolios at the end of the third quarter of 2019. There were 15 hedge funds in our database with MT positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the fresh hedge fund action surrounding ArcelorMittal (NYSE:MT).
How have hedgies been trading ArcelorMittal (NYSE:MT)?
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in MT a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in ArcelorMittal (NYSE:MT) was held by Renaissance Technologies, which reported holding $83.7 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $42.2 million position. Other investors bullish on the company included Luminus Management, Balyasny Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Luminus Management allocated the biggest weight to ArcelorMittal (NYSE:MT), around 0.52% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, earmarking 0.39 percent of its 13F equity portfolio to MT.
Because ArcelorMittal (NYSE:MT) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds who sold off their entire stakes heading into Q4. Intriguingly, Jacob Doft’s Highline Capital Management cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $56.1 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund said goodbye to about $4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to ArcelorMittal (NYSE:MT). We will take a look at Quest Diagnostics Incorporated (NYSE:DGX), SK Telecom Co., Ltd. (NYSE:SKM), Pinterest, Inc. (NYSE:PINS), and Xylem Inc (NYSE:XYL). 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 |
|---|---|---|---|
| DGX | 33 | 561377 | 9 |
| SKM | 6 | 42756 | -1 |
| PINS | 31 | 980235 | 0 |
| XYL | 19 | 524367 | 0 |
| Average | 22.25 | 527184 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $527 million. That figure was $193 million in MT’s case. Quest Diagnostics Incorporated (NYSE:DGX) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 6 bullish hedge fund positions. ArcelorMittal (NYSE:MT) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on MT as the stock returned 20.2% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
