Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Ramaco Resources, Inc. (NASDAQ:METC) based on that data.
Is Ramaco Resources, Inc. (NASDAQ:METC) worth your attention right now? Investors who are in the know are betting on the stock. The number of long hedge fund positions moved up by 1 in recent months. Our calculations also showed that METC 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). METC was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with METC positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. Now we’re going to review the fresh hedge fund action regarding Ramaco Resources, Inc. (NASDAQ:METC).
What have hedge funds been doing with Ramaco Resources, Inc. (NASDAQ:METC)?
At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards METC over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Mangrove Partners held the most valuable stake in Ramaco Resources, Inc. (NASDAQ:METC), which was worth $1.8 million at the end of the third quarter. On the second spot was Luminus Management which amassed $0.1 million worth of shares. Zebra Capital Management, Corsair Capital Management, and Renaissance Technologies 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 Mangrove Partners allocated the biggest weight to Ramaco Resources, Inc. (NASDAQ:METC), around 0.25% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to METC.
Consequently, specific money managers were leading the bulls’ herd. Mountain Lake Investment Management, managed by Mitch Cantor, established the largest position in Ramaco Resources, Inc. (NASDAQ:METC). Mountain Lake Investment Management had $0 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Ramaco Resources, Inc. (NASDAQ:METC). These stocks are Harrow Health, Inc. (NASDAQ:HROW), Millendo Therapeutics, Inc. (NASDAQ:MLND), Palatin Technologies, Inc. (NYSE:PTN), and Axovant Gene Therapies Ltd. (NASDAQ:AXGT). This group of stocks’ market valuations match METC’s market valuation.
|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 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $2 million in METC’s case. Harrow Health, Inc. (NASDAQ:HROW) is the most popular stock in this table. On the other hand Palatin Technologies, Inc. (NYSE:PTN) is the least popular one with only 5 bullish hedge fund positions. Ramaco Resources, Inc. (NASDAQ:METC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately METC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); METC investors were disappointed as the stock returned 12.1% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.