At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not ArcelorMittal SA (ADR) (NYSE:MT) makes for a good investment right now.
Is ArcelorMittal SA (ADR) (NYSE:MT) undervalued? Prominent investors are reducing their bets on the stock. The number of bullish hedge fund bets dropped by 4 lately. MT was in 18 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with MT positions at the end of the previous quarter. 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 Westinghouse Air Brake Technologies Corp (NYSE:WAB), Huntington Bancshares Incorporated (NASDAQ:HBAN), and Newmont Mining Corp (NYSE:NEM) to gather more data points.
According to most investors, hedge funds are viewed as worthless, old investment vehicles of the past. While there are over 8,000 funds trading at present, Our experts look at the masters of this club, about 700 funds. These hedge fund managers orchestrate the majority of the smart money’s total asset base, and by following their matchless stock picks, Insider Monkey has determined a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s take a gander at the recent action surrounding ArcelorMittal SA (ADR) (NYSE:MT).
What have hedge funds been doing with ArcelorMittal SA (ADR) (NYSE:MT)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Costen Haley’s HBK Investments has the most valuable position in ArcelorMittal SA (ADR) (NYSE:MT), worth close to $54.2 million, corresponding to 0.7% of its total 13F portfolio. The second largest stake is held by OZ Management, led by Daniel S. Och, holding a $34.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish include D E Shaw, and Hari Hariharan’s NWI Management.
Seeing as ArcelorMittal SA (ADR) (NYSE:MT) has experienced bearish sentiment from the smart money, logic holds that there is a sect of fund managers that elected to cut their positions entirely last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the biggest investment of the 700 funds watched by Insider Monkey, totaling about $27.8 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dropped about $13.3 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to ArcelorMittal SA (ADR) (NYSE:MT). We will take a look at Westinghouse Air Brake Technologies Corp (NYSE:WAB), Huntington Bancshares Incorporated (NASDAQ:HBAN), Newmont Mining Corp (NYSE:NEM), and Vantiv Inc (NYSE:VNTV). This group of stocks’ market values are closest to MT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $355 million. That figure was $232 million in MT’s case. Newmont Mining Corp (NYSE:NEM) is the most popular stock in this table. On the other hand Huntington Bancshares Incorporated (NASDAQ:HBAN) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks ArcelorMittal SA (ADR) (NYSE:MT) is even less popular than HBAN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, 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.