The hedge fund industry closed in negative territory for 2015, marking the fourth year of decline for the industry since 1990. Nonetheless, approximately 55% of the entire pool of hedge funds posted gains last year, so the natural selection process might lead to a stronger performance for the industry in the upcoming years. Data shows that hedge fund customers withdrew more capital from hedge funds than they invested in the fourth quarter of 2015, which denoted the first quarter of net outflows since 2011. Having this in mind, the following article will discuss four filings submitted with the U.S Securities and Exchange Commission by a few widely-known hedge fund managers tracked by Insider Monkey, including Clint Carlson and Nathaniel August.
Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).
Nathaniel August’s Mangrove Partners keeps buying more shares of SunCoke Energy Inc. (NYSE:SXC). The investment firm acquired a 1.79 million-share stake in the independent producer of coke during the third quarter, and has been gradually boosting it since then. According to several Form 4 filings, Mangrove Partners acquired 91,580 shares on Tuesday and 245,563 shares on Wednesday, at prices ranging from $2.11 to $2.21 per share. The investment firm acquired an additional 399,601 shares last week and currently holds 7.36 million shares, which account for 11.51% of the company’s outstanding common stock. SunCoke Energy Inc. (NYSE:SXC) owns and operates five cokemaking facilities in the United States and one cokemaking facility in Brazil. Coke is produced by heating metallurgical coal in a refractory oven; hence, the company’s financial performance has been impacted by depressed commodity prices (including coke).
SunCoke Energy reported total revenue of $1.01 billion for the nine months that ended September 30, down from $1.11 billion reported for the same period of the prior year. The decrease was mainly attributable to the pass-through of lower coal prices, as mentioned above. The company’s full-year 2015 estimated coke production totaled 4.12 million tons, down by 52,000 tons relative to the production reached in 2014. The shares of SunCoke Energy have plummeted by 86% over the last year, which appears to have created an attractive entry point for some investors. The hedge fund sentiment towards the stock did not change much during the third quarter however, as the number of smart money investors with positions in the company remained flat quarter-over-quarter at 35. Michael Blitzer’s Kingstown Capital Management upped its stake in SunCoke Energy Inc. (NYSE:SXC) by 70% during the September quarter to 4.25 million shares.
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The next two pages of this article discuss the other three filings submitted with the SEC.