Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is AK Steel Holding Corporation (NYSE:AKS) an attractive investment now? Investors who are in the know are definitely betting on the stock. The number of long hedge fund positions advanced by 1 lately. AKS was in 33 hedge funds’ portfolios at the end of September. There were 32 hedge funds in our database with AKS holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Ferro Corporation (NYSE:FOE), Summit Hotel Properties Inc (NYSE:INN), and TTM Technologies, Inc. (NASDAQ:TTMI) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What have hedge funds been doing with AK Steel Holding Corporation (NYSE:AKS)?
Heading into the fourth quarter of 2016, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a rise of 3% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards AKS over the last 5 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holds the number one position in AK Steel Holding Corporation (NYSE:AKS). Arrowstreet Capital has a $68 million position in the stock. On Arrowstreet Capital’s heels is Graham Capital Management, led by Kenneth Tropin, which holds a $30.2 million position; 1% of its 13F portfolio is allocated to the company. Other peers that hold long positions comprise Robert Polak’s Anchor Bolt Capital, and Chuck Royce’s Royce & Associates. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, specific money managers were breaking ground themselves. Point State Capital, led by Zach Schreiber, created the biggest position in AK Steel Holding Corporation (NYSE:AKS). Point State Capital had $11.7 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $6.4 million position during the quarter. The other funds with brand new AKS positions are Ken Griffin’s Citadel Investment Group, Brian Taylor’s Pine River Capital Management, and Philip Rosenstrach’s Pomelo Capital.
Let’s go over hedge fund activity in other stocks similar to AK Steel Holding Corporation (NYSE:AKS). We will take a look at Ferro Corporation (NYSE:FOE), Summit Hotel Properties Inc (NYSE:INN), TTM Technologies, Inc. (NASDAQ:TTMI), and Gentherm Inc (NASDAQ:THRM). All of these stocks’ market caps are closest to AKS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $220 million in AKS’s case. Ferro Corporation (NYSE:FOE) is the most popular stock in this table. On the other hand Summit Hotel Properties Inc (NYSE:INN) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks AK Steel Holding Corporation (NYSE:AKS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.