We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Ryerson Holding Corporation (NYSE:RYI) based on that data.
Is RYI a good stock to buy now? Ryerson Holding Corporation (NYSE:RYI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of September. Our calculations also showed that RYI 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Fulcrum Therapeutics, Inc. (NASDAQ:FULC), Houghton Mifflin Harcourt Co (NASDAQ:HMHC), and P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) to gather more data points.
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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. Keeping this in mind we’re going to go over the key hedge fund action surrounding Ryerson Holding Corporation (NYSE:RYI).
Do Hedge Funds Think RYI Is A Good Stock To Buy Now?
At the end of September, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RYI over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, D E Shaw, managed by D. E. Shaw, holds the largest position in Ryerson Holding Corporation (NYSE:RYI). D E Shaw has a $2.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish consist of Jacob Doft’s Highline Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ali Motamed’s Invenomic Capital Management. In terms of the portfolio weights assigned to each position Highline Capital Management allocated the biggest weight to Ryerson Holding Corporation (NYSE:RYI), around 1.76% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, earmarking 0.54 percent of its 13F equity portfolio to RYI.
Seeing as Ryerson Holding Corporation (NYSE:RYI) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few money managers that slashed their entire stakes heading into Q4. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $0.1 million in stock, and Chuck Royce’s Royce & Associates was right behind this move, as the fund said goodbye to about $0 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ryerson Holding Corporation (NYSE:RYI) but similarly valued. We will take a look at Fulcrum Therapeutics, Inc. (NASDAQ:FULC), Houghton Mifflin Harcourt Co (NASDAQ:HMHC), P.A.M. Transportation Services, Inc. (NASDAQ:PTSI), Transcat, Inc. (NASDAQ:TRNS), Accuray Incorporated (NASDAQ:ARAY), Home Bancorp, Inc. (NASDAQ:HBCP), and National CineMedia, Inc. (NASDAQ:NCMI). This group of stocks’ market caps are closest to RYI’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 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $11 million in RYI’s case. Houghton Mifflin Harcourt Co (NASDAQ:HMHC) is the most popular stock in this table. On the other hand P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) is the least popular one with only 1 bullish hedge fund positions. Ryerson Holding Corporation (NYSE:RYI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RYI is 66.9. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on RYI as the stock returned 115.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.