Hedge Funds Have Never Been This Bullish On Companhia Siderurgica Nacional (SID)

Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Companhia Siderurgica Nacional (NYSE:SID).

Companhia Siderurgica Nacional (NYSE:SID) was in 10 hedge funds’ portfolios at the end of the second quarter of 2019. SID investors should pay attention to an increase in support from the world’s most elite money managers in recent months. There were 8 hedge funds in our database with SID positions at the end of the previous quarter. Our calculations also showed that SID isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most market participants, hedge funds are seen as slow, old investment tools of yesteryear. While there are over 8000 funds trading at the moment, We look at the masters of this group, about 750 funds. Most estimates calculate that this group of people have their hands on bulk of all hedge funds’ total asset base, and by paying attention to their top investments, Insider Monkey has uncovered a few investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .


Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the key hedge fund action encompassing Companhia Siderurgica Nacional (NYSE:SID).

How are hedge funds trading Companhia Siderurgica Nacional (NYSE:SID)?

At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in SID a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


Among these funds, Renaissance Technologies held the most valuable stake in Companhia Siderurgica Nacional (NYSE:SID), which was worth $13.8 million at the end of the second quarter. On the second spot was Millennium Management which amassed $11.4 million worth of shares. Moreover, Capital Growth Management, Citadel Investment Group, and Two Sigma Advisors were also bullish on Companhia Siderurgica Nacional (NYSE:SID), allocating a large percentage of their portfolios to this stock.

Now, key money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the most outsized position in Companhia Siderurgica Nacional (NYSE:SID). Two Sigma Advisors had $0.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Michael Gelband’s ExodusPoint Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Companhia Siderurgica Nacional (NYSE:SID). We will take a look at H&R Block, Inc. (NYSE:HRB), Chemed Corporation (NYSE:CHE), Parsley Energy Inc (NYSE:PE), and Oshkosh Corporation (NYSE:OSK). This group of stocks’ market caps are closest to SID’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HRB 25 381222 9
CHE 21 406059 0
PE 36 785649 2
OSK 24 402471 0
Average 26.5 493850 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $494 million. That figure was $38 million in SID’s case. Parsley Energy Inc (NYSE:PE) is the most popular stock in this table. On the other hand Chemed Corporation (NYSE:CHE) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Companhia Siderurgica Nacional (NYSE:SID) is even less popular than CHE. Hedge funds dodged a bullet by taking a bearish stance towards SID. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SID wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SID investors were disappointed as the stock returned -25.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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