Hedge Funds Are Piling Into Allegheny Technologies Incorporated (ATI)

·6 min read

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 Allegheny Technologies Incorporated (NYSE:ATI).

Allegheny Technologies Incorporated (NYSE:ATI) was in 28 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ATI has experienced an increase in support from the world's most elite money managers in recent months. There were 20 hedge funds in our database with ATI positions at the end of the first quarter. Our calculations also showed that ATI 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.

Nick Thakore of Diametric 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. With all of this in mind we're going to analyze the latest hedge fund action encompassing Allegheny Technologies Incorporated (NYSE:ATI).

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

At the end of June, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ATI over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ATI A Good Stock To Buy?
Is ATI A Good Stock To Buy?

The largest stake in Allegheny Technologies Incorporated (NYSE:ATI) was held by D E Shaw, which reported holding $79.2 million worth of stock at the end of June. It was followed by Fisher Asset Management with a $52.5 million position. Other investors bullish on the company included Royce & Associates, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Mountaineer Partners Management allocated the biggest weight to Allegheny Technologies Incorporated (NYSE:ATI), around 6.63% of its 13F portfolio. Roubaix Capital is also relatively very bullish on the stock, setting aside 2.03 percent of its 13F equity portfolio to ATI.

As aggregate interest increased, key money managers have jumped into Allegheny Technologies Incorporated (NYSE:ATI) headfirst. Jones Road Capital Management, managed by Aaron Wertentheil, assembled the most valuable position in Allegheny Technologies Incorporated (NYSE:ATI). Jones Road Capital Management had $5.2 million invested in the company at the end of the quarter. Kenneth Tropin's Graham Capital Management also made a $4.6 million investment in the stock during the quarter. The other funds with brand new ATI positions are Nick Thakore's Diametric Capital, Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital), and Noam Gottesman's GLG Partners.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Allegheny Technologies Incorporated (NYSE:ATI) but similarly valued. We will take a look at Microvision, Inc. (NASDAQ:MVIS), Crescent Point Energy Corp (NYSE:CPG), The ODP Corporation (NYSE:ODP), The St. Joe Company (NYSE:JOE), Cinemark Holdings, Inc. (NYSE:CNK), iRobot Corporation (NASDAQ:IRBT), and Plexus Corp. (NASDAQ:PLXS). This group of stocks' market caps are closest to ATI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MVIS,11,68467,-1 CPG,13,105057,0 ODP,23,462625,-1 JOE,15,1231582,-2 CNK,32,316144,2 IRBT,19,63072,2 PLXS,17,73363,3 Average,18.6,331473,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.6 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $270 million in ATI's case. Cinemark Holdings, Inc. (NYSE:CNK) is the most popular stock in this table. On the other hand Microvision, Inc. (NASDAQ:MVIS) is the least popular one with only 11 bullish hedge fund positions. Allegheny Technologies Incorporated (NYSE:ATI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATI is 80.5. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately ATI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ATI were disappointed as the stock returned -17.6% since the end of June (through 10/15) 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.

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

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