We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Aluminum Corp. of China Limited (NYSE:ACH).
Aluminum Corp. of China Limited (NYSE:ACH) shares haven't seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of December. At the end of this article we will also compare ACH to other stocks including Hubbell Incorporated (NYSE:HUBB), Royal Gold, Inc (NASDAQ:RGLD), and Genpact Limited (NYSE:G) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_746830" align="aligncenter" width="400"] Matthew Hulsizer of PEAK6 Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now we're going to go over the key hedge fund action encompassing Aluminum Corp. of China Limited (NYSE:ACH).
How are hedge funds trading Aluminum Corp. of China Limited (NYSE:ACH)?
At Q4's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ACH over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies has the most valuable position in Aluminum Corp. of China Limited (NYSE:ACH), worth close to $4.4 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Aluminum Corp. of China Limited (NYSE:ACH), around 0.0034% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0002 percent of its 13F equity portfolio to ACH.
Seeing as Aluminum Corp. of China Limited (NYSE:ACH) has faced declining sentiment from the aggregate hedge fund industry, it's safe to say that there was a specific group of money managers that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Matthew Hulsizer's PEAK6 Capital Management dropped the biggest position of all the hedgies watched by Insider Monkey, worth close to $0.1 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also sold off its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Aluminum Corp. of China Limited (NYSE:ACH) but similarly valued. These stocks are Hubbell Incorporated (NYSE:HUBB), Royal Gold, Inc (NASDAQ:RGLD), Genpact Limited (NYSE:G), and Vedanta Ltd (NYSE:VEDL). This group of stocks' market valuations are closest to ACH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUBB,23,413964,-2 RGLD,30,177674,3 G,37,769167,-1 VEDL,13,74538,2 Average,25.75,358836,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $359 million. That figure was $5 million in ACH's case. Genpact Limited (NYSE:G) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Aluminum Corp. of China Limited (NYSE:ACH) is even less popular than VEDL. Hedge funds dodged a bullet by taking a bearish stance towards ACH. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately ACH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ACH investors were disappointed as the stock returned -38.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
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