Is Allegheny Technologies Incorporated (ATI) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article we look at what those investors think of Allegheny Technologies Incorporated (NYSE:ATI).

Is Allegheny Technologies Incorporated (NYSE:ATI) a buy here? Prominent investors are getting less optimistic. The number of long hedge fund positions were trimmed by 2 in recent months. ATI was in 15 hedge funds’ portfolios at the end of the third quarter of 2015. There were 17 hedge funds in our database with ATI positions at the end of the previous quarter. At the end of this article we will also compare ATI to other stocks including Intersil Corp (NASDAQ:ISIL), Chesapeake Lodging Trust (NYSE:CHSP), and Monogram Residential Trust Inc (NYSE:MORE) to get a better sense of its popularity.

Follow Allegheny Technologies Inc (NYSE:ATI)

To most stock holders, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are more than 8000 funds with their doors open today, We hone in on the upper echelon of this club, approximately 700 funds. These hedge fund managers command bulk of the hedge fund industry’s total capital, and by tailing their best equity investments, Insider Monkey has spotted a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to go over the new action regarding Allegheny Technologies Incorporated (NYSE:ATI).

How have hedgies been trading Allegheny Technologies Incorporated (NYSE:ATI)?

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Kerr Neilson’s Platinum Asset Management has the largest position in Allegheny Technologies Incorporated (NYSE:ATI), worth close to $78.7 million, comprising 2.1% of its total 13F portfolio. On Platinum Asset Management’s heels is Thomas Ellis and Todd Hammer of North Run Capital, with a $36.1 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Lee Munder’s Lee Munder Capital Group, D. E. Shaw’s D E Shaw and Chuck Royce’s Royce & Associates.

Due to the fact that Allegheny Technologies Incorporated (NYSE:ATI) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital dumped the largest position of all the hedgies watched by Insider Monkey, valued at close to $10.6 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund said goodbye to about $6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Allegheny Technologies Incorporated (NYSE:ATI). These stocks are Intersil Corp (NASDAQ:ISIL), Chesapeake Lodging Trust (NYSE:CHSP), Monogram Residential Trust Inc (NYSE:MORE), and CommVault Systems, Inc. (NASDAQ:CVLT). This group of stocks’ market caps are closest to ATI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ISIL 14 41692 2
CHSP 12 26853 -1
MORE 7 15067 -2
CVLT 22 345515 0

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $191 million in ATI’s case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand Monogram Residential Trust Inc (NYSE:MORE) is the least popular one with only 7 bullish hedge fund positions. Allegheny Technologies Incorporated (NYSE:ATI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CVLT might be a better candidate to consider a long position.