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AK Steel Holding Corporation (AKS) Sinks Further On Below Consensus Guidance: Is The Stock Worth Buying?

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Shares of AK Steel Holding Corporation (NYSE:AKS) sank by 1.9% in after-hours trading on Friday after the company issued below consensus guidance for the second quarter of 2015, expecting a net loss of $0.37 to $0.42 per share which is bigger than analysts’ consensus estimate of a $0.30 per share loss. The move after hours comes after a 6.45% intraday loss for the stock on the most recent trading day, June 19. AK Steel Holding Corporation (NYSE:AKS) said in its guidance that it anticipates about $929 per ton as the average selling price during the second quarter, or about 7% lower than in the preceding quarter. According to the firm, the slide in average selling price can be blamed on heightened importing, which has adversely affected selling prices in the carbon spot market. In this article we’ll take a look at hedge fund and insider sentiment and try to determine if there is value left is holding AK Steel’s stock.

AK Steel Holding Corporation (NYSE:AKS)

Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research, we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand, the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith in large-cap stocks. In forward tests since August 2012, these top small-cap stocks beat the market by an impressive 83 percentage points, returning over 142% (read the details here). Hence, a retail investor needs to isolate himself from the herd and take advantage of the best growth opportunities in the market by concentrating on small-cap stocks.

In terms of insider sentiment, there were insider purchases of AK Steel Holding Corporation’s shares in the first quarter of the year. Gregory Hoffbauer, Controller & Chief Account Officer, bought 3,000 shares at the end of January. Director Vicente Wright, Executive Vice President and Chief Legal Officer David Horn, and Executive Vice President of Finance and Chief Finance Officer Roger Newport bought 10,000, 12,000, and 5,000 shares of AK Steel respectively, also at the end of January. By the start of February, Chairman, President and CEO James Wainscott and Vice President, Gen Counsel and Corporate Secretary Joseph Alter bought 10,000 and 2,000 shares respectively. This is a great degree of insider buying and indicates extremely bullish company-wide sentiment on the stock among upper management, after its extremely poor January. Even with the latest dip, shares are up by 17% since the end of January.

With all of this in mind, let’s take a look at AK Steel Holding Corporation (NYSE:AKS) activity regarding hedge funds.

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