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Steel Excel Inc (SXCL): Are Hedge Funds Right About This Stock?

Now, some big names were leading the bulls’ herd. Steel Partners initiated the biggest position in Steel Excel Inc (NASDAQ:SXCL). Mario Gabelli’s GAMCO Investors also initiated its stake during the quarter. The only other fund with a brand new SXCL position is Paul Orlin and Alex Porter’s Amici Capital.

Let’s go over hedge fund activity in other stocks similar to Steel Excel Inc (NASDAQ:SXCL). These stocks are W&T Offshore, Inc. (NYSE:WTI), Magnachip Semiconductor Corp (NYSE:MX), Xactly Corp (NYSE:XTLY), and Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY). This group of stocks’ market valuations resemble SXCL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WTI 8 20485 -7
MX 21 130318 2
XTLY 4 10923 -6
DHY 4 2167 0

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was just $41 million, compared to $153 million in SXCL’s case. Magnachip Semiconductor Corp (NYSE:MX) is the most popular stock in this table. On the other hand Xactly Corp (NYSE:XTLY) is the least popular one with only 4 bullish hedge fund positions, the same as Steel Excel Inc (NASDAQ:SXCL). Therefore, it seems that smart money investors are not very fond of Steel Excel, compared to some of its market cap peers. It may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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