After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Mechel PAO (NYSE:MTL).
Mechel PAO (NYSE:MTL) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that MTL 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). At the end of this article we will also compare MTL to other stocks including eGain Corporation (NASDAQ:EGAN), Luther Burbank Corporation (NASDAQ:LBC), and Boston Omaha Corporation (NASDAQ:BOMN) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 check out the key hedge fund action encompassing Mechel PAO (NYSE:MTL).
How are hedge funds trading Mechel PAO (NYSE:MTL)?
At third quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in MTL 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in Mechel PAO (NYSE:MTL), worth close to $1.6 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, founded by Jim Simons, holding a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions contain Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Mechel PAO (NYSE:MTL), around 0.0016% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0001 percent of its 13F equity portfolio to MTL.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mechel PAO (NYSE:MTL) but similarly valued. We will take a look at eGain Corporation (NASDAQ:EGAN), Luther Burbank Corporation (NASDAQ:LBC), Boston Omaha Corporation (NASDAQ:BOMN), Catchmark Timber Trust Inc (NYSE:CTT), Aegion Corp (NASDAQ:AEGN), Mercer International Inc. (NASDAQ:MERC), and Altimmune, Inc. (NASDAQ:ALT). This group of stocks' market values are similar to MTL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGAN,11,36330,0 LBC,4,3020,2 BOMN,5,166210,-7 CTT,13,53862,4 AEGN,9,13719,-1 MERC,13,82614,3 ALT,18,144736,6 Average,10.4,71499,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $2 million in MTL's case. Altimmune, Inc. (NASDAQ:ALT) is the most popular stock in this table. On the other hand Luther Burbank Corporation (NASDAQ:LBC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Mechel PAO (NYSE:MTL) is even less popular than LBC. Our overall hedge fund sentiment score for MTL is 20. 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. Hedge funds dodged a bullet by taking a bearish stance towards MTL. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately MTL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MTL investors were disappointed as the stock returned -0.7% since the end of the third quarter (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.