At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Constellium NV (NYSE:CSTM) undervalued? Money managers are turning less bullish. The number of bullish hedge fund positions dropped by 3 in recent months. CSTM was in 22 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with CSTM holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Wstrn Ast Clymr Infltn Lkd Opts & Inc Fd (NYSE:WIW), Orthofix International NV (NASDAQ:OFIX), and Osiris Therapeutics, Inc. (NASDAQ:OSIR) to gather more data points.
At the moment there is a multitude of tools investors employ to evaluate stocks. A pair of the most under-the-radar tools is composed of hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top fund managers can outpace their index-focused peers by a significant amount (see the details here).
Now, let’s view the fresh action encompassing Constellium NV (NYSE:CSTM).
How have hedgies been trading Constellium NV (NYSE:CSTM)?
Heading into Q4, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Phill Gross and Robert Atchinson’s Adage Capital Management has the biggest position in Constellium NV (NYSE:CSTM), worth close to $56.4 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is North Run Capital, led by Thomas Ellis and Todd Hammer, holding a $43.9 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions include D. E. Shaw’s D E Shaw, Brian Taylor’s Pine River Capital Management and Clint Carlson’s Carlson Capital.
Judging by the fact that Constellium NV (NYSE:CSTM) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedgies that slashed their full holdings by the end of the third quarter. At the top of the heap, Kenney Y. Oh’s SeaStone Capital Management sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $24 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $18.3 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Constellium NV (NYSE:CSTM). These stocks are Wstrn Ast Clymr Infltn Lkd Opts & Inc Fd (NYSE:WIW), Orthofix International NV (NASDAQ:OFIX), Osiris Therapeutics, Inc. (NASDAQ:OSIR), and Blackstone / GSO Strategic Credit Fund (NYSE:BGB). This group of stocks’ market valuations resemble CSTM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WIW | 4 | 4053 | 1 |
| OFIX | 21 | 244538 | 2 |
| OSIR | 10 | 52804 | -1 |
| BGB | 7 | 50633 | 3 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $189 million in CSTM’s case. Orthofix International NV (NASDAQ:OFIX) is the most popular stock in this table. On the other hand, Wstrn Ast Clymr Infltn Lkd Opts & Inc Fd (NYSE:WIW) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Constellium NV (NYSE:CSTM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it is possible that this stock could make for a good addition to your portfolios.
