We at Insider Monkey have gone over 867 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 Cleveland-Cliffs Inc (NYSE:CLF) based on that data.
Is CLF a good stock to buy? Cleveland-Cliffs Inc (NYSE:CLF) investors should be aware of a decrease in enthusiasm from smart money recently. Cleveland-Cliffs Inc (NYSE:CLF) was in 35 hedge funds’ portfolios at the end of September. The all time high for this statistic is 44. Our calculations also showed that CLF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Jeffrey Gendell of Tontine Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a look at the latest hedge fund action regarding Cleveland-Cliffs Inc (NYSE:CLF).
Do Hedge Funds Think CLF Is A Good Stock To Buy Now?
At third quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the second quarter of 2021. By comparison, 22 hedge funds held shares or bullish call options in CLF a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Cleveland-Cliffs Inc (NYSE:CLF), which was worth $249.5 million at the end of the third quarter. On the second spot was Tontine Asset Management which amassed $148.9 million worth of shares. Citadel Investment Group, Millennium Management, and Iridian 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 Key Square Capital Management allocated the biggest weight to Cleveland-Cliffs Inc (NYSE:CLF), around 13.73% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, setting aside 12.78 percent of its 13F equity portfolio to CLF.
Since Cleveland-Cliffs Inc (NYSE:CLF) has experienced falling interest from hedge fund managers, it’s safe to say that there is a sect of money managers that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that William Harnisch’s Peconic Partners LLC dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $71.9 million in stock. Ken Heebner’s fund, Capital Growth Management, also cut its stock, about $20.5 million worth. These transactions are interesting, as total hedge fund interest was cut by 9 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Cleveland-Cliffs Inc (NYSE:CLF). We will take a look at Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), Guidewire Software Inc (NYSE:GWRE), Hill-Rom Holdings, Inc. (NYSE:HRC), Intellia Therapeutics, Inc. (NASDAQ:NTLA), Levi Strauss & Co. (NYSE:LEVI), Chegg Inc (NYSE:CHGG), and Hubbell Incorporated (NYSE:HUBB). This group of stocks’ market caps are closest to CLF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NCLH | 36 | 502017 | -7 |
| GWRE | 26 | 2005849 | -1 |
| HRC | 46 | 1410210 | 24 |
| NTLA | 37 | 1620289 | -4 |
| LEVI | 26 | 225120 | -4 |
| CHGG | 39 | 514158 | 1 |
| HUBB | 18 | 571249 | 3 |
| Average | 32.6 | 978413 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $978 million. That figure was $682 million in CLF’s case. Hill-Rom Holdings, Inc. (NYSE:HRC) is the most popular stock in this table. On the other hand Hubbell Incorporated (NYSE:HUBB) is the least popular one with only 18 bullish hedge fund positions. Cleveland-Cliffs Inc (NYSE:CLF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLF is 50.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately CLF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CLF were disappointed as the stock returned 2.7% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
