Hedge Funds Are Buying These Steel Stocks

#4 ArcelorMittal SA (ADR) (NYSE:MT)

– Investors with long positions (as of March 31): 21

– Aggregate value of investors’ holdings (as of March 31): $235.21 million

The number of hedge funds tracked by us long ArcelorMittal SA (ADR) (NYSE:MT) increased by five and the aggregate value of their holdings in it swelled by $40.5 million during the first quarter. Billionaire Jim Simons‘ Renaissance Technologies increased its stake in the company by 89% to 5.56 million shares during that period. Though shares of the steel giant are currently trading up 12.8% year to date, they are still down 55% and 85% over the past 12 months and five years, respectively. According to analysts, after seeing such heavy declines, at these levels the stock has limited downside risks given that the company can manage to generate more than $4.5 billion in EBITDA  and continues to remain cash flow positive. To reduce the debt on its balance sheet, on May 11, ArcelorMittal SA (ADR) announced that it would be buying back $1.5 billion worth of its most expensive bonds, which sport a coupon yield of 9.85% and are due 2019.

#3 Rio Tinto plc (ADR) (NYSE:RIO)

– Investors with long positions (as of March 31): 24

– Aggregate value of investors’ holdings (as of March 31): $281 million

Mining behemoth Rio Tinto plc (ADR) (NYSE:RIO) saw a marked increase in its popularity among hedge funds during the first quarter with its ownership among funds covered by us increasing by 50% and the aggregate value of their holdings in it jumping by 200%. In anticipation of the company’s first quarter earnings, Rio Tinto plc (ADR) (NYSE:RIO)’s stock saw a major rally in April. However, it has given up all those gains in the past couple of weeks and currently trades down 5.4% year-to-date. On May 23, Axiom analyst Gordon Johnson released a note to his clients in which he asked them to stay away from mining stocks, arguing that the recent hawkish commentary  by the Fed will cause major metal, mining, and mining equipment stocks across the globe to start another down move. Mr. Johnson also stated that China devaluing Yuan even further is the biggest risk that these stocks face. Hedge funds that initiated a stake in Rio Tinto plc during the first quarter included Robert Bishop‘s Impala Asset Management, which purchased almost 3.0 million shares of the company.