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 873 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 June 30th. In this article we look at what those investors think of United States Steel Corporation (NYSE:X).
United States Steel Corporation (NYSE:X) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. United States Steel Corporation (NYSE:X) was in 39 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that X isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Jeffrey Gendell of Tontine Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Now we’re going to take a look at the recent hedge fund action surrounding United States Steel Corporation (NYSE:X).
Do Hedge Funds Think X Is A Good Stock To Buy Now?
At Q2’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 77% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in X a year ago. 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, 0 was the largest shareholder of United States Steel Corporation (NYSE:X), with a stake worth $215 million reported as of the end of June. Trailing D E Shaw was Citadel Investment Group, which amassed a stake valued at $133.7 million. Millennium Management, Citadel Investment Group, and Slate Path 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 Luminus Management allocated the biggest weight to United States Steel Corporation (NYSE:X), around 2.8% of its 13F portfolio. Slate Path Capital is also relatively very bullish on the stock, setting aside 2.51 percent of its 13F equity portfolio to X.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. GQG Partners, managed by Rajiv Jain, initiated the most outsized position in United States Steel Corporation (NYSE:X). GQG Partners had $41.4 million invested in the company at the end of the quarter. Jeffrey Gendell’s Tontine Asset Management also initiated a $25.2 million position during the quarter. The following funds were also among the new X investors: Benjamin A. Smith’s Laurion Capital Management, Jonathan Barrett and Paul Segal’s Luminus Management, and Israel Englander’s Millennium Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as United States Steel Corporation (NYSE:X) but similarly valued. These stocks are C3.ai, Inc. (NYSE:AI), Halozyme Therapeutics, Inc. (NASDAQ:HALO), Stitch Fix, Inc. (NASDAQ:SFIX), BlackLine, Inc. (NASDAQ:BL), American Campus Communities, Inc. (NYSE:ACC), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), and WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC). This group of stocks’ market valuations resemble X’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AI | 29 | 258851 | 2 |
| HALO | 20 | 194639 | -3 |
| SFIX | 35 | 702790 | 7 |
| BL | 20 | 266005 | -4 |
| ACC | 21 | 222547 | -5 |
| RARE | 32 | 770180 | 7 |
| WSC | 52 | 1399877 | 5 |
| Average | 29.9 | 544984 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $545 million. That figure was $689 million in X’s case. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the most popular stock in this table. On the other hand Halozyme Therapeutics, Inc. (NASDAQ:HALO) is the least popular one with only 20 bullish hedge fund positions. United States Steel Corporation (NYSE:X) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for X is 68.9. 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately X wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on X were disappointed as the stock returned -11.1% since the end of June (through 10/11) 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 United States Steel Corp (NYSE:X)
Follow United States Steel Corp (NYSE:X)
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Disclosure: None. This article was originally published at Insider Monkey.
