Is HCC Stock A Buy or Sell?

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 887 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 December 31st. In this article we look at what those investors think of Warrior Met Coal Inc. (NYSE:HCC).

Is HCC stock a buy? Warrior Met Coal Inc. (NYSE:HCC) has seen a decrease in enthusiasm from smart money recently. Warrior Met Coal Inc. (NYSE:HCC) was in 25 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 35. Our calculations also showed that HCC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Martin Whitman of Third Avenue Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to take a glance at the fresh hedge fund action regarding Warrior Met Coal Inc. (NYSE:HCC).

Do Hedge Funds Think HCC Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HCC over the last 22 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

The largest stake in Warrior Met Coal Inc. (NYSE:HCC) was held by Waratah Capital Advisors, which reported holding $48.3 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $38.1 million position. Other investors bullish on the company included Third Avenue Management, Citadel Investment Group, and Platinum Asset Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Warrior Met Coal Inc. (NYSE:HCC), around 3.64% of its 13F portfolio. Waratah Capital Advisors is also relatively very bullish on the stock, dishing out 3.32 percent of its 13F equity portfolio to HCC.

Because Warrior Met Coal Inc. (NYSE:HCC) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedgies that slashed their full holdings in the fourth quarter. Interestingly, Jack Ripsteen’s Potrero Capital Research dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth about $2.8 million in stock, and Robert Bishop’s Impala Asset Management was right behind this move, as the fund sold off about $2.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds in the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Warrior Met Coal Inc. (NYSE:HCC). These stocks are Enterprise Financial Services Corp (NASDAQ:EFSC), ArcBest Corp (NASDAQ:ARCB), National Research Corporation (NASDAQ:NRC), Ontrak, Inc. (NASDAQ:OTRK), H&E Equipment Services, Inc. (NASDAQ:HEES), Luminex Corporation (NASDAQ:LMNX), and The Geo Group, Inc. (NYSE:GEO). All of these stocks’ market caps match HCC’s market cap.

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As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $236 million in HCC’s case. Luminex Corporation (NASDAQ:LMNX) is the most popular stock in this table. On the other hand National Research Corporation (NASDAQ:NRC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Warrior Met Coal Inc. (NYSE:HCC) is more popular among hedge funds. Our overall hedge fund sentiment score for HCC is 75.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately HCC wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on HCC were disappointed as the stock returned -14.6% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.