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Hedge Funds Are Crazy About Commercial Metals Company (CMC): Harsco Corporation (HSC), Grupo Simec S.A.B. de C.V. (ADR) (SIM)

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Commercial Metals Company (NYSE:CMC) was in 14 hedge funds’ portfolio at the end of December. CMC shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 9 hedge funds in our database with CMC positions at the end of the previous quarter.

In the eyes of most market participants, hedge funds are viewed as worthless, outdated financial vehicles of years past. While there are more than 8000 funds in operation today, we hone in on the leaders of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total asset base, and by tracking their highest performing picks, we have figured out a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see the details here).

Just as integral, bullish insider trading activity is another way to parse down the world of equities. There are a number of motivations for an executive to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this tactic if investors know what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the latest action surrounding Commercial Metals Company (NYSE:CMC).

What have hedge funds been doing with Commercial Metals Company (NYSE:CMC)?

At the end of the fourth quarter, a total of 14 of the hedge funds we track were long in this stock, a change of 56% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes considerably.

AQR CAPITAL MANAGEMENTAccording to our comprehensive database, Cliff Asness’s AQR Capital Management had the biggest position in Commercial Metals Company (NYSE:CMC), worth close to $22.3 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $20.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and David Costen Haley’s HBK Investments.

As one would reasonably expect, key hedge funds were breaking ground themselves. HBK Investments, managed by David Costen Haley, initiated the most outsized position in Commercial Metals Company (NYSE:CMC). HBK Investments had 2.4 million invested in the company at the end of the quarter. Steven Cohen’s SAC Capital Advisors also initiated a $1.1 million position during the quarter. The other funds with brand new CMC positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Catapult Capital Management, and John Bader’s Halcyon Asset Management.

What have insiders been doing with Commercial Metals Company (NYSE:CMC)?

Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past six months. Over the last half-year time period, Commercial Metals Company (NYSE:CMC) has experienced 2 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Commercial Metals Company (NYSE:CMC). These stocks are SunCoke Energy, Inc (NYSE:SXC), United States Steel Corporation (NYSE:X), Mechel OAO (ADR) (NYSE:MTL), Grupo Simec S.A.B. de C.V. (ADR) (NYSEAMEX:SIM), and Harsco Corporation (NYSE:HSC). All of these stocks are in the steel & iron industry and their market caps resemble CMC’s market cap.

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