The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Commercial Metals Company (NYSE:CMC).
Is Commercial Metals Company (NYSE:CMC) a sound investment right now? The smart money was taking a bullish view. The number of bullish hedge fund positions inched up by 2 in recent months. Commercial Metals Company (NYSE:CMC) was in 22 hedge funds’ portfolios at the end of June. The all time high for this statistic is 27. Our calculations also showed that CMC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Keeping this in mind let’s view the latest hedge fund action surrounding Commercial Metals Company (NYSE:CMC).
Do Hedge Funds Think CMC Is A Good Stock To Buy Now?
At second quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CMC over the last 24 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of Commercial Metals Company (NYSE:CMC), with a stake worth $37.2 million reported as of the end of June. Trailing D E Shaw was Royce & Associates, which amassed a stake valued at $23.3 million. Fairholme (FAIRX), AQR Capital Management, and Citadel Investment Group 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 Highline Capital Management allocated the biggest weight to Commercial Metals Company (NYSE:CMC), around 5.02% of its 13F portfolio. Verdad Advisers is also relatively very bullish on the stock, designating 4.44 percent of its 13F equity portfolio to CMC.
As aggregate interest increased, key money managers were leading the bulls’ herd. Fairholme (FAIRX), managed by Bruce Berkowitz, initiated the largest position in Commercial Metals Company (NYSE:CMC). Fairholme (FAIRX) had $17.1 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $1.5 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, Matthew Hulsizer’s PEAK6 Capital Management, and Donald Sussman’s Paloma Partners.
Let’s now review hedge fund activity in other stocks similar to Commercial Metals Company (NYSE:CMC). We will take a look at Six Flags Entertainment Corp (NYSE:SIX), First Hawaiian, Inc. (NASDAQ:FHB), Allogene Therapeutics, Inc. (NASDAQ:ALLO), Sana Biotechnology, Inc. (NASDAQ:SANA), Covetrus, Inc. (NASDAQ:CVET), ServisFirst Bancshares, Inc. (NASDAQ:SFBS), and Equitrans Midstream Corporation (NYSE:ETRN). This group of stocks’ market valuations are closest to CMC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SIX | 36 | 894997 | -1 |
| FHB | 10 | 144615 | -9 |
| ALLO | 26 | 240779 | 7 |
| SANA | 10 | 76873 | -5 |
| CVET | 18 | 144353 | 1 |
| SFBS | 10 | 10152 | 1 |
| ETRN | 27 | 289754 | -1 |
| Average | 19.6 | 257360 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $257 million. That figure was $121 million in CMC’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand First Hawaiian, Inc. (NASDAQ:FHB) is the least popular one with only 10 bullish hedge fund positions. Commercial Metals Company (NYSE:CMC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMC is 54.5. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately CMC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CMC were disappointed as the stock returned 2.6% since the end of June (through 10/22) 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.
Follow Commercial Metals Co (nk:CMC)
Follow Commercial Metals Co (nk:CMC)
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Disclosure: None. This article was originally published at Insider Monkey.
