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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Olympic Steel, Inc. (NASDAQ:ZEUS).
Is Olympic Steel (ZEUS) a good stock to buy now? ZEUS investors should pay attention to a decrease in enthusiasm from smart money in recent months. Olympic Steel, Inc. (NASDAQ:ZEUS) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. There were 6 hedge funds in our database with ZEUS positions at the end of the second quarter. Our calculations also showed that ZEUS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
According to most investors, hedge funds are seen as slow, old financial vehicles of the past. While there are more than 8000 funds trading at present, Our researchers choose to focus on the masters of this group, around 850 funds. These investment experts manage most of all hedge funds’ total capital, and by observing their best investments, Insider Monkey has formulated various investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s take a peek at the recent hedge fund action regarding Olympic Steel, Inc. (NASDAQ:ZEUS).
Hedge fund activity in Olympic Steel, Inc. (NASDAQ:ZEUS)
Heading into the fourth quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ZEUS over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Olympic Steel, Inc. (NASDAQ:ZEUS), which was worth $1.5 million at the end of the third quarter. On the second spot was D E Shaw which amassed $0.8 million worth of shares. Ancora Advisors, Royce & Associates, and PEAK6 Capital 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 Ancora Advisors allocated the biggest weight to Olympic Steel, Inc. (NASDAQ:ZEUS), around 0.02% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.0043 percent of its 13F equity portfolio to ZEUS.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified ZEUS as a viable investment and initiated a position in the stock.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Olympic Steel, Inc. (NASDAQ:ZEUS) but similarly valued. We will take a look at Applied Genetic Technologies Corp (NASDAQ:AGTC), Protalix BioTherapeutics Inc. (NYSE:PLX), Barnes & Noble Education Inc (NYSE:BNED), Citizens Holding Company (NASDAQ:CIZN), Target Hospitality Corp. (NASDAQ:TH), Tyme Technologies, Inc. (NASDAQ:TYME), and VivoPower International PLC (NASDAQ:VVPR). This group of stocks’ market caps match ZEUS’s market cap.
|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 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $3 million in ZEUS’s case. Target Hospitality Corp. (NASDAQ:TH) is the most popular stock in this table. On the other hand Citizens Holding Company (NASDAQ:CIZN) is the least popular one with only 1 bullish hedge fund positions. Olympic Steel, Inc. (NASDAQ:ZEUS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ZEUS is 31.4. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on ZEUS as the stock returned 37.2% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.