“Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards First Majestic Silver Corp (NYSE:AG).
First Majestic Silver Corp (NYSE:AG) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that AG isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are plenty of metrics investors employ to assess their stock investments. A couple of the most underrated metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can trounce the S&P 500 by a very impressive margin (see the details here).
We’re going to take a peek at the new hedge fund action encompassing First Majestic Silver Corp (NYSE:AG).
What have hedge funds been doing with First Majestic Silver Corp (NYSE:AG)?
Heading into the fourth quarter of 2018, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the second quarter of 2018. By comparison, 6 hedge funds held shares or bullish call options in AG heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Sprott Asset Management was the largest shareholder of First Majestic Silver Corp (NYSE:AG), with a stake worth $5.7 million reported as of the end of September. Trailing Sprott Asset Management was Citadel Investment Group, which amassed a stake valued at $1.4 million. D E Shaw, Citadel Investment Group, and Slate Path Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in First Majestic Silver Corp (NYSE:AG). Citadel Investment Group had $1 million invested in the company at the end of the quarter. David Greenspan’s Slate Path Capital also initiated a $1 million position during the quarter. The only other fund with a brand new AG position is Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as First Majestic Silver Corp (NYSE:AG) but similarly valued. These stocks are Mercer International Inc. (NASDAQ:MERC), Nexeo Solutions, Inc. (NASDAQ:NXEO), QAD Inc. (NASDAQ:QADA), and Standard Motor Products, Inc. (NYSE:SMP). This group of stocks’ market values match AG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MERC | 19 | 215276 | 1 |
| NXEO | 30 | 531459 | 9 |
| QADA | 16 | 162775 | 1 |
| SMP | 10 | 132232 | 4 |
| Average | 18.75 | 260436 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $12 million in AG’s case. Nexeo Solutions, Inc. (NASDAQ:NXEO) is the most popular stock in this table. On the other hand Standard Motor Products, Inc. (NYSE:SMP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks First Majestic Silver Corp (NYSE:AG) is even less popular than SMP. 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.
Disclosure: None. This article was originally published at Insider Monkey.
