Cemex SAB de CV (CX): Hedge Fund Sentiment Unchanged

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Hedge fund interest in Cemex SAB de CV (NYSE:CX) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Arconic Inc. (NYSE:ARNC), Steel Dynamics, Inc. (NASDAQ:STLD), and Aramark (NYSE:ARMK) to gather more data points.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Let’s take a look at the recent hedge fund action surrounding Cemex SAB de CV (NYSE:CX).

How are hedge funds trading Cemex SAB de CV (NYSE:CX)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CX over the last 13 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

No of Hedge Funds CX Positions

Among these funds, Fisher Asset Management held the most valuable stake in Cemex SAB de CV (NYSE:CX), which was worth $53.5 million at the end of the third quarter. On the second spot was Oaktree Capital Management which amassed $33.9 million worth of shares. Moreover, Prince Street Capital Management, GMT Capital, and Balyasny Asset Management were also bullish on Cemex SAB de CV (NYSE:CX), allocating a large percentage of their portfolios to this stock.

Seeing as Cemex SAB de CV (NYSE:CX) has witnessed bearish sentiment from the smart money, it’s safe to say that there is a sect of hedge funds who sold off their full holdings last quarter. Interestingly, Philippe Jabre’s Jabre Capital Partners sold off the biggest investment of the 700 funds tracked by Insider Monkey, worth an estimated $2.5 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cemex SAB de CV (NYSE:CX) but similarly valued. We will take a look at Arconic Inc. (NYSE:ARNC), Steel Dynamics, Inc. (NASDAQ:STLD), Aramark (NYSE:ARMK), and Nektar Therapeutics (NASDAQ:NKTR). This group of stocks’ market valuations are similar to CX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARNC 40 3295207 7
STLD 28 571282 -1
ARMK 35 1551740 8
NKTR 27 417833 3
Average 32.5 1459016 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.46 billion. That figure was $158 million in CX’s case. Arconic Inc. (NYSE:ARNC) is the most popular stock in this table. On the other hand Nektar Therapeutics (NASDAQ:NKTR) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Cemex SAB de CV (NYSE:CX) is even less popular than NKTR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None. This article was originally published at Insider Monkey.