Do Hedge Funds Love GrafTech International Ltd. (EAF)?

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about GrafTech International Ltd. (NYSE:EAF).

GrafTech International Ltd. (NYSE:EAF) investors should pay attention to a decrease in support from the world’s most elite money managers of late. GrafTech International Ltd. (NYSE:EAF) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that EAF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to go over the fresh hedge fund action encompassing GrafTech International Ltd. (NYSE:EAF).

Donald Yacktman of Yacktman Asset Management

Do Hedge Funds Think EAF Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EAF over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Donald Yacktman’s Yacktman Asset Management has the most valuable position in GrafTech International Ltd. (NYSE:EAF), worth close to $53.7 million, corresponding to 0.5% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which holds a $26.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of David Kowitz and Sheldon Kasowitz’s Indus Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Indus Capital allocated the biggest weight to GrafTech International Ltd. (NYSE:EAF), around 4.58% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, designating 1.37 percent of its 13F equity portfolio to EAF.

Seeing as GrafTech International Ltd. (NYSE:EAF) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies that decided to sell off their positions entirely heading into Q4. Intriguingly, Simon Sadler’s Segantii Capital cut the biggest position of all the hedgies tracked by Insider Monkey, worth an estimated $12.5 million in stock, and Mike Masters’s Masters Capital Management was right behind this move, as the fund sold off about $11.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 5 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to GrafTech International Ltd. (NYSE:EAF). We will take a look at CVB Financial Corp. (NASDAQ:CVBF), Sharecare Inc. (NASDAQ:SHCR), Advantage Solutions Inc. (NASDAQ:ADV), Live Oak Bancshares Inc (NASDAQ:LOB), CS Disco Inc. (NYSE:LAW), Heska Corp (NASDAQ:HSKA), and CNX Resources Corporation (NYSE:CNX). All of these stocks’ market caps resemble EAF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVBF 18 50453 5
SHCR 10 60480 10
ADV 20 370785 -4
LOB 10 87812 -1
LAW 22 100775 22
HSKA 22 358706 2
CNX 34 525941 4
Average 19.4 222136 5.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $247 million in EAF’s case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand Sharecare Inc. (NASDAQ:SHCR) is the least popular one with only 10 bullish hedge fund positions. GrafTech International Ltd. (NYSE:EAF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EAF is 68.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on EAF as the stock returned 13% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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