Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Cleveland-Cliffs Inc (NYSE:CLF) changed recently.
Cleveland-Cliffs Inc (NYSE:CLF) was in 44 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CLF has experienced an increase in hedge fund interest recently. There were 36 hedge funds in our database with CLF holdings at the end of March. Our calculations also showed that CLF isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Heebner of Capital Growth Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. With all of this in mind we’re going to take a glance at the key hedge fund action surrounding Cleveland-Cliffs Inc (NYSE:CLF).
Do Hedge Funds Think CLF Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CLF over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Cleveland-Cliffs Inc (NYSE:CLF), with a stake worth $275.9 million reported as of the end of June. Trailing Fisher Asset Management was Tontine Asset Management, which amassed a stake valued at $144 million. Millennium Management, Citadel Investment Group, and LMR Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to Cleveland-Cliffs Inc (NYSE:CLF), around 12.76% of its 13F portfolio. Peconic Partners LLC is also relatively very bullish on the stock, earmarking 7.19 percent of its 13F equity portfolio to CLF.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Iridian Asset Management, managed by David Cohen and Harold Levy, assembled the most outsized position in Cleveland-Cliffs Inc (NYSE:CLF). Iridian Asset Management had $77.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $22.6 million investment in the stock during the quarter. The other funds with brand new CLF positions are Ken Heebner’s Capital Growth Management, Jos Shaver’s Electron Capital Partners, and Steve Zheng’s Deepcurrents Investment Group.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cleveland-Cliffs Inc (NYSE:CLF) but similarly valued. We will take a look at Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), Marathon Oil Corporation (NYSE:MRO), PRA Health Sciences Inc (NASDAQ:PRAH), The Scotts Miracle-Gro Company (NYSE:SMG), Deckers Outdoor Corp (NASDAQ:DECK), ChargePoint Holdings, Inc. (NYSE:CHPT), and ironSource Ltd. (NYSE:IS). This group of stocks’ market values resemble CLF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRVI | 20 | 572985 | -6 |
| MRO | 34 | 655729 | 5 |
| PRAH | 43 | 2995527 | 8 |
| SMG | 32 | 369779 | -2 |
| DECK | 44 | 1473505 | 4 |
| CHPT | 17 | 149306 | -7 |
| IS | 32 | 771885 | -20 |
| Average | 31.7 | 998388 | -2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $998 million. That figure was $1111 million in CLF’s case. Deckers Outdoor Corp (NASDAQ:DECK) is the most popular stock in this table. On the other hand ChargePoint Holdings, Inc. (NYSE:CHPT) is the least popular one with only 17 bullish hedge fund positions. Cleveland-Cliffs Inc (NYSE:CLF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLF is 90. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately CLF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CLF were disappointed as the stock returned -8.8% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Cleveland-Cliffs Inc. (NYSE:CLF)
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Disclosure: None. This article was originally published at Insider Monkey.
