New York (HedgeCo.net) – Aluminum giant Alcoa has struggled for most of 2015 as the stock price fell from $15.63 to start the year to a closing low of $7.82 on November 12. That put the stock at a 50% loss until it started rallying in recent weeks, but it is still down over 40% on the year.

Despite the terrible price performance, the company has been attracting bullish bets from two prominent hedge funds in recent months. Seth Klarman’s Baupost Group revealed an allocation of 8.4% to Alcoa in their most recent 13F filing and Paul Singer’s Elliott Management revealed an investment in the company worth 6.4% of their portfolio.

Baupost and Elliott are both value-oriented hedge funds that are known for being more long-term with their investments. Neither fund is known for being activist investors, so it is unlikely they have made their investments with a goal of shaking up the company and forcing management to make changes.

Both Baupost and Elliott have outperformed the market as a whole over the long run with Elliott averaging 14.6% on an annualized basis since inception and Baupost has averaged 17% since inception. The historical annual return of the S&P 500 is just over 10%, giving both funds an impressive track record.

Rick Pendergraft
Research Analyst
HedgeCoVest