Hedge Funds Losing Interest In Companhia Siderurgica Nacional (SID)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Companhia Siderurgica Nacional (NYSE:SID).

Companhia Siderurgica Nacional (NYSE:SID) was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. SID investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 6 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 (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to analyze the recent hedge fund action regarding Companhia Siderurgica Nacional (NYSE:SID).

Hedge fund activity in Companhia Siderurgica Nacional (NYSE:SID)

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SID over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in Companhia Siderurgica Nacional (NYSE:SID), which was worth $2.6 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $0.2 million worth of shares. GLG Partners, AQR Capital Management, and Engineers Gate Manager 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 Engineers Gate Manager allocated the biggest weight to Companhia Siderurgica Nacional (NYSE:SID), around 0.0014% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, dishing out 0.0012 percent of its 13F equity portfolio to SID.

Because Companhia Siderurgica Nacional (NYSE:SID) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few funds that elected to cut their full holdings heading into Q4. Interestingly, Israel Englander’s Millennium Management sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $10.9 million in stock. Renaissance Technologies, also said goodbye to its stock, about $0.7 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Companhia Siderurgica Nacional (NYSE:SID) but similarly valued. These stocks are Univar Solutions Inc (NYSE:UNVR), EQT Corporation (NYSE:EQT), CNO Financial Group Inc (NYSE:CNO), and Vicor Corp (NASDAQ:VICR). This group of stocks’ market valuations are similar to SID’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $293 million. That figure was $3 million in SID’s case. Univar Solutions Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Vicor Corp (NASDAQ:VICR) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Companhia Siderurgica Nacional (NYSE:SID) is even less popular than VICR. Hedge funds clearly dropped the ball on SID as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on SID as the stock returned 44.5% so far in the second quarter and outperformed the market by an even larger margin.

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