Should I Avoid SunCoke Energy, Inc (SXC)?

In this article we will take a look at whether hedge funds think SunCoke Energy, Inc (NYSE:SXC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

SunCoke Energy, Inc (NYSE:SXC) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 35. SXC shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 22 hedge funds in our database with SXC holdings at the end of March. Our calculations also showed that SXC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most traders, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open today, We choose to focus on the leaders of this group, around 850 funds. Most estimates calculate that this group of people administer the lion’s share of the smart money’s total capital, and by shadowing their matchless equity investments, Insider Monkey has unsheathed a few investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Jeffrey Gendell of Tontine Asset Management

Keeping this in mind we’re going to take a gander at the key hedge fund action regarding SunCoke Energy, Inc (NYSE:SXC).

Do Hedge Funds Think SXC Is A Good Stock To Buy Now?

At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SXC over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is SXC A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the biggest position in SunCoke Energy, Inc (NYSE:SXC). Renaissance Technologies has a $25.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Scion Asset Management, led by Michael Burry, holding a $11.2 million position; 0.5% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism contain Brett Hendrickson’s Nokomis Capital, Jeffrey Gendell’s Tontine Asset Management and Stephen Mildenhall’s Contrarius Investment Management. In terms of the portfolio weights assigned to each position Nokomis Capital allocated the biggest weight to SunCoke Energy, Inc (NYSE:SXC), around 4.14% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, setting aside 0.83 percent of its 13F equity portfolio to SXC.

Since SunCoke Energy, Inc (NYSE:SXC) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their entire stakes heading into Q3. At the top of the heap, Bruce Kovner’s Caxton Associates LP sold off the largest position of the 750 funds followed by Insider Monkey, comprising about $0.3 million in stock. Thomas Bailard’s fund, Bailard Inc, also said goodbye to its stock, about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks similar to SunCoke Energy, Inc (NYSE:SXC). These stocks are Viomi Technology Co., Ltd (NASDAQ:VIOT), The York Water Company (NASDAQ:YORW), Peapack-Gladstone Financial Corp (NASDAQ:PGC), Adagene Inc. (NASDAQ:ADAG), Plymouth Industrial REIT, Inc. (NYSE:PLYM), One Liberty Properties, Inc. (NYSE:OLP), and Sabine Royalty Trust (NYSE:SBR). This group of stocks’ market caps match SXC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VIOT 4 2355 -2
YORW 7 15104 3
PGC 14 50659 1
ADAG 7 13192 -3
PLYM 10 43109 2
OLP 4 33147 -4
SBR 5 17683 0
Average 7.3 25036 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $84 million in SXC’s case. Peapack-Gladstone Financial Corp (NASDAQ:PGC) is the most popular stock in this table. On the other hand Viomi Technology Co., Ltd (NASDAQ:VIOT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks SunCoke Energy, Inc (NYSE:SXC) is more popular among hedge funds. Our overall hedge fund sentiment score for SXC is 68.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately SXC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SXC were disappointed as the stock returned -3.3% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Follow Suncoke Energy Inc. (NYSE:SXC)

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Disclosure: None. This article was originally published at Insider Monkey.