While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding SunCoke Energy, Inc (NYSE:SXC).
Is SunCoke Energy, Inc (NYSE:SXC) a healthy stock for your portfolio? Money managers were in an optimistic mood. The number of long hedge fund bets moved up by 3 lately. SunCoke Energy, Inc (NYSE:SXC) was in 22 hedge funds’ portfolios at the end of March. The all time high for this statistic is 35. Our calculations also showed that SXC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with SXC holdings at the end of December.
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. Now let’s take a peek at the new hedge fund action regarding SunCoke Energy, Inc (NYSE:SXC).
Do Hedge Funds Think SXC Is A Good Stock To Buy Now?
At the end of March, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in SXC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of SunCoke Energy, Inc (NYSE:SXC), with a stake worth $28.6 million reported as of the end of March. Trailing Renaissance Technologies was Nokomis Capital, which amassed a stake valued at $10.4 million. Contrarius Investment Management, Tontine Asset Management, and Scion Asset Management 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 Nokomis Capital allocated the biggest weight to SunCoke Energy, Inc (NYSE:SXC), around 4.5% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, setting aside 0.91 percent of its 13F equity portfolio to SXC.
As aggregate interest increased, some big names have been driving this bullishness. Engineers Gate Manager, managed by Greg Eisner, created the most outsized position in SunCoke Energy, Inc (NYSE:SXC). Engineers Gate Manager had $0.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.3 million position during the quarter. The following funds were also among the new SXC investors: Bruce Kovner’s Caxton Associates LP, Thomas Bailard’s Bailard Inc, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SunCoke Energy, Inc (NYSE:SXC) but similarly valued. These stocks are Valhi, Inc. (NYSE:VHI), Bank First Corp (NASDAQ:BFC), Genius Brands International, Inc. (NASDAQ:GNUS), Aspen Aerogels Inc (NYSE:ASPN), Ontrak, Inc. (NASDAQ:OTRK), Magenta Therapeutics, Inc. (NASDAQ:MGTA), and Dynex Capital Inc (NYSE:DX). This group of stocks’ market values match SXC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $87 million in SXC’s case. Magenta Therapeutics, Inc. (NASDAQ:MGTA) is the most popular stock in this table. On the other hand Valhi, Inc. (NYSE:VHI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks SunCoke Energy, Inc (NYSE:SXC) is more popular among hedge funds. Our overall hedge fund sentiment score for SXC is 76.9. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately SXC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SXC were disappointed as the stock returned -4.5% since the end of the first quarter (through 7/16) 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 most of these stocks already outperformed the market since 2019.
Follow Suncoke Energy Inc. (NYSE:SXC)
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Disclosure: None. This article was originally published at Insider Monkey.