GraftTech (EAF) is a Laggard Stock But Junto Investments Still Hopes for the Best

Junto Investments, a recently founded investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be seen here. A return of 38.26% was recorded by the fund for the year end 2020, outperforming both its S&P 500 benchmark that returned 18.79% and MSCI World Index with a 17.42% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Junto Investments, in their Q4 2020 Investor Letter said that they maintained their position in GrafTech International Ltd. (NYSE: EAF), and even if it was a laggard stock, they are still optimistic for the company. GrafTech International Ltd. is a graphite electrodes and petroleum coke manufacturing company that currently has a $2.7 billion market cap. For the past 3 months, EAF delivered a decent 52.14% return and settled at $10.30 per share at the closing of January 28th.

Here is what Junto Investments has to say about GrafTech International Ltd. in their investor letter:

“The laggard of the portfolio was GrafTech International, although it doesn’t seem all too bad looking at the return as displayed above. However, the price hit a low of $5.56 during the year, down 44% from our cost base. As the pandemic hit, steel production shrunk dramatically and so did the demand for GrafTech’s graphite electrodes. Some of the steel producers who had signed take-or-pay contracts with the company pressured renegotiations and some went bankrupt. The certainty behind GrafTech’s contracted cash flows for the next few years started wearing thin and that was reflected swiftly in the market price. Due to our small position and the company’s intact, strong competitive moat, we keep our ownership of the business as steel production ticks up and the trend towards environmentally friendly steel production continues.”

Last September 2020, we published an article telling that GrafTech International Ltd. (NYSE: EAF) was in 24 hedge fund portfolios. Its all time high statistics is 33. EAF delivered a -7.12% return in the past 12 months.

Our calculations show that GrafTech International Ltd. (NYSE: EAF) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

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