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 821 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 March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Ryerson Holding Corporation (NYSE:RYI) and determine whether the smart money was really smart about this stock.
Is Ryerson Holding Corporation (NYSE:RYI) the right pick for your portfolio? The best stock pickers were selling. The number of bullish hedge fund bets retreated by 1 lately. Our calculations also showed that RYI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). RYI was in 13 hedge funds’ portfolios at the end of the first quarter of 2020. There were 14 hedge funds in our database with RYI holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are greater than 8000 funds with their doors open at present, Our researchers look at the top tier of this group, about 850 funds. These money managers have their hands on the majority of the smart money’s total asset base, and by keeping an eye on their unrivaled equity investments, Insider Monkey has unsheathed several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 9 states that banned plastic bags to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the latest hedge fund action regarding Ryerson Holding Corporation (NYSE:RYI).
What have hedge funds been doing with Ryerson Holding Corporation (NYSE:RYI)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the fourth quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in RYI a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Ryerson Holding Corporation (NYSE:RYI), with a stake worth $3.6 million reported as of the end of September. Trailing AQR Capital Management was D E Shaw, which amassed a stake valued at $1.7 million. Arrowstreet Capital, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Ryerson Holding Corporation (NYSE:RYI), around 0.15% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to RYI.
Seeing as Ryerson Holding Corporation (NYSE:RYI) has faced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of funds that slashed their full holdings last quarter. At the top of the heap, Michael Gelband’s ExodusPoint Capital cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth about $0.3 million in stock, and Thomas Bailard’s Bailard Inc was right behind this move, as the fund sold off about $0.2 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds last quarter.
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 ASA Gold and Precious Metals Ltd (NYSE:ASA), Team, Inc. (NYSE:TISI), Silicom Ltd. (NASDAQ:SILC), and Funko, Inc. (NASDAQ:FNKO). This group of stocks’ market valuations resemble RYI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASA | 5 | 10067 | 0 |
| TISI | 11 | 26523 | 0 |
| SILC | 5 | 6841 | 0 |
| FNKO | 12 | 11488 | -2 |
| Average | 8.25 | 13730 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $9 million in RYI’s case. Funko, Inc. (NASDAQ:FNKO) is the most popular stock in this table. On the other hand ASA Gold and Precious Metals Ltd (NYSE:ASA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Ryerson Holding Corporation (NYSE:RYI) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately RYI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RYI were disappointed as the stock returned 3.4% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
