How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding A M Castle and Co (NYSE:CAS).
A M Castle and Co (NYSE:CAS) investors should pay attention to a decrease in support from the world’s most elite money managers recently. A M Castle and Co (NYSE:CAS) was in 7 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with A M Castle and Co (NYSE:CAS) positions at the end of the previous quarter. 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 BIOLASE Inc (NASDAQ:BIOL), FX Energy, Inc. (NASDAQ:FXEN), and Golden Star Resources Ltd. (USA) (NYSEMKT:GSS) to gather more data points.
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In the 21st century investor’s toolkit, there are dozens of indicators shareholders use to size up their holdings. A pair of the most underrated indicators are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the S&P 500 by a significant margin (see the details here).
With all of this in mind, we’re going to take a look at the fresh action surrounding A M Castle and Co (NYSE:CAS).
What have hedge funds been doing with A M Castle and Co (NYSE:CAS)?
Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 46% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Raging Capital Management, managed by William C. Martin, holds the largest position in A M Castle and Co (NYSE:CAS). Raging Capital Management has a $10.3 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $5.4 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Israel Englander’s Millennium Management, and David Brown’s Hawk Ridge Management.
Judging by the fact that A M Castle and Co (NYSE:CAS) has experienced a bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedge funds that slashed their entire stakes heading into Q4. Intriguingly, Joe Huber’s Huber Capital Management dropped the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $3.5 million in stock. Vadim Perelman’s fund, Baker Street Capital, also cut its stock, about $1 million worth of shares. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as A M Castle and Co (NYSE:CAS) but similarly valued. These stocks are BIOLASE Inc (NASDAQ:BIOL), FX Energy, Inc. (NASDAQ:FXEN), Golden Star Resources Ltd. (USA) (NYSEMKT:GSS), and Marrone Bio Innovations Inc (NASDAQ:MBII). This group of stocks’ market caps matches A M Castle and Co (NYSE:CAS)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIOL | 8 | 9259 | -1 |
| FXEN | 5 | 1981 | -1 |
| GSS | 4 | 1654 | -1 |
| MBII | 4 | 4106 | -1 |
As you can see, these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $18 million in A M Castle and Co (NYSE:CAS)’s case. BIOLASE Inc (NASDAQ:BIOL) is the most popular stock in this table. On the other hand, Golden Star Resources Ltd. (USA) (NYSEMKT:GSS) is the least popular one with only 4 bullish hedge fund positions. A M Castle and Co (NYSE:CAS) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, BIOLASE Inc (NASDAQ:BIOL) might be a better candidate to consider a long position.
