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 at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Constellium SE (NYSE:CSTM).
Is CSTM a good stock to buy? Constellium SE (NYSE:CSTM) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. Constellium SE (NYSE:CSTM) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 50. Our calculations also showed that CSTM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing Constellium SE (NYSE:CSTM).
Do Hedge Funds Think CSTM Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CSTM over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Nut Tree Capital was the largest shareholder of Constellium SE (NYSE:CSTM), with a stake worth $31.8 million reported as of the end of September. Trailing Nut Tree Capital was Sachem Head Capital, which amassed a stake valued at $29.5 million. Bronson Point Partners, Samlyn Capital, and Brigade Capital 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 Constellium SE (NYSE:CSTM), around 10.61% of its 13F portfolio. Nut Tree Capital is also relatively very bullish on the stock, earmarking 9.64 percent of its 13F equity portfolio to CSTM.
Due to the fact that Constellium SE (NYSE:CSTM) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedge funds that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Mark Kingdon’s Kingdon Capital dumped the biggest position of the 750 funds tracked by Insider Monkey, totaling about $17.8 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also cut its stock, about $0.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to Constellium SE (NYSE:CSTM). We will take a look at Marcus & Millichap Inc (NYSE:MMI), Cadence Bancorporation (NYSE:CADE), The Pennant Group, Inc. (NASDAQ:PNTG), Linx S.A. (NYSE:LINX), Kaman Corporation (NYSE:KAMN), NextPoint Residential Trust Inc (NYSE:NXRT), and Deluxe Corporation (NYSE:DLX). This group of stocks’ market valuations are similar to CSTM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MMI | 5 | 67635 | -3 |
| CADE | 22 | 110929 | 1 |
| PNTG | 15 | 30509 | 5 |
| LINX | 5 | 33977 | 2 |
| KAMN | 12 | 138073 | -1 |
| NXRT | 9 | 69227 | -4 |
| DLX | 20 | 69029 | 2 |
| Average | 12.6 | 74197 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $181 million in CSTM’s case. Cadence Bancorporation (NYSE:CADE) is the most popular stock in this table. On the other hand Marcus & Millichap Inc (NYSE:MMI) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Constellium SE (NYSE:CSTM) is more popular among hedge funds. Our overall hedge fund sentiment score for CSTM is 71. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on CSTM as the stock returned 82.5% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
