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Do Hedge Funds Love Commercial Metals Company (CMC)?

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th. What do these smart investors think about Commercial Metals Company (NYSE:CMC)?

Commercial Metals Company (NYSE:CMC) shareholders have witnessed an increase in enthusiasm from smart money recently. CMC was in 18 hedge funds’ portfolios at the end of the third quarter of 2018. There were 17 hedge funds in our database with CMC holdings at the end of the previous quarter. Our calculations also showed that CMC isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ken Griffin CITADEL INVESTMENT GROUP

Let’s analyze the new hedge fund action surrounding Commercial Metals Company (NYSE:CMC).

How are hedge funds trading Commercial Metals Company (NYSE:CMC)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in CMC over the last 13 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

CMC_dec2018

More specifically, Highline Capital Management was the largest shareholder of Commercial Metals Company (NYSE:CMC), with a stake worth $53 million reported as of the end of September. Trailing Highline Capital Management was Citadel Investment Group, which amassed a stake valued at $32.2 million. Royce & Associates, GLG Partners, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, specific money managers have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, created the biggest position in Commercial Metals Company (NYSE:CMC). Renaissance Technologies had $4.8 million invested in the company at the end of the quarter. Philippe Jabre’s Jabre Capital Partners also made a $1.7 million investment in the stock during the quarter. The following funds were also among the new CMC investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Matthew Tewksbury’s Stevens Capital Management.

Let’s check out hedge fund activity in other stocks similar to Commercial Metals Company (NYSE:CMC). We will take a look at Plantronics, Inc. (NYSE:PLT), Minerals Technologies Inc (NYSE:MTX), Rowan Companies plc (NYSE:RDC), and WD-40 Company (NASDAQ:WDFC). This group of stocks’ market values are closest to CMC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLT 25 184247 6
MTX 15 170727 -2
RDC 31 761642 5
WDFC 10 154086 1
Average 20.25 317676 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $318 million. That figure was $179 million in CMC’s case. Rowan Companies plc (NYSE:RDC) is the most popular stock in this table. On the other hand WD-40 Company (NASDAQ:WDFC) is the least popular one with only 10 bullish hedge fund positions. Commercial Metals Company (NYSE:CMC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RDC might be a better candidate to consider a long position.

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

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