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 817 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 September 30th, about a month before the elections. In this article we look at what those investors think of Ramaco Resources, Inc. (NASDAQ:METC).
Is Ramaco Resources (METC) a good stock to buy now? METC was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 10. METC has experienced a decrease in activity from the world’s largest hedge funds in recent months. There were 9 hedge funds in our database with METC holdings at the end of June. Our calculations also showed that METC 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.
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 66 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 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. Now we’re going to go over the new hedge fund action regarding Ramaco Resources, Inc. (NASDAQ:METC).
How have hedgies been trading Ramaco Resources, Inc. (NASDAQ:METC)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards METC over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ramaco Resources, Inc. (NASDAQ:METC) was held by Mangrove Partners, which reported holding $2.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.3 million position. Other investors bullish on the company included Corsair Capital Management, Winton Capital Management, and Jasper Ridge Partners. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to Ramaco Resources, Inc. (NASDAQ:METC), around 0.29% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to METC.
Judging by the fact that Ramaco Resources, Inc. (NASDAQ:METC) has experienced a decline in interest from the smart money, logic holds that there was a specific group of hedgies that elected to cut their positions entirely in the third quarter. Interestingly, Mitch Cantor’s Mountain Lake Investment Management cut the biggest position of the 750 funds tracked by Insider Monkey, totaling about $0 million in stock. Donald Sussman’s fund, Paloma Partners, also dumped its stock, about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ramaco Resources, Inc. (NASDAQ:METC) but similarly valued. We will take a look at Tsakos Energy Navigation Ltd. (NYSE:TNP), Horizon Global Corp (NYSE:HZN), Ayala Pharmaceuticals, Inc. (NASDAQ:AYLA), Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), BioSig Technologies, Inc. (NASDAQ:BSGM), ContraFect Corp (NASDAQ:CFRX), and BiomX Inc. (NYSE:PHGE). This group of stocks’ market caps resemble METC’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 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $3 million in METC’s case. ContraFect Corp (NASDAQ:CFRX) is the most popular stock in this table. On the other hand Horizon Global Corp (NYSE:HZN) is the least popular one with only 3 bullish hedge fund positions. Ramaco Resources, Inc. (NASDAQ:METC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for METC is 38.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 16.1 percentage points. Unfortunately METC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on METC were disappointed as the stock returned -8.6% since the end of September (through 11/27) 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.