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.
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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.
Hedge fund activity in AK Steel Holding Corporation (NYSE:AKS)
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long in this stock, a change of -33% from the end of the fourth quarter, while invested capital also decreased heavily, to $141 million from $240 million (though the poor performance of shares during the first quarter accounts for some of that).
Of the funds tracked by Insider Monkey, Kurt Billick’s Bocage Capital had the most valuable position in AK Steel Holding Corporation (NYSE:AKS), worth close to $25.1 million, corresponding to 12% of its total 13F portfolio. Coming in second is Balyasny Asset Management, led by Dmitry Balyasny, holding a $20 million position. Balyasny Asset Management has 0.2% of its 13F portfolio invested in the stock. Other hedgies that hold long positions comprise Israel Englander’s Millennium Management, Kenneth Tropin’s Graham Capital Management, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Judging by the fact that AK Steel Holding Corporation (NYSE:AKS) has witnessed a substantial decline in interest from the hedge fund industry, it’s easy to see that there was a specific group of hedgies who sold off their entire stakes last quarter. Interestingly, Steve Cohen’s Point72 Asset Management dropped the biggest stake of the 700+ funds followed by Insider Monkey, comprising an estimated $21.4 million in stock. Joe DiMenna of ZWEIG DIMENNA PARTNERS was right behind this move, as the fund dumped about $16.2 million worth of stock. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 10 funds last quarter.
Despite the insider buying, which did indeed signal a short-term turnaround for the stock, because of the substantial decrease in hedge fund interest last quarter and the recent cuts to guidance that followed their bearish sentiment, we feel the window has passed to buy AK Steel Holding Corporation (NYSE:AKS) at a good price, and the stock should be avoided for now.