Do Hedge Funds Love Hecla Mining Company (HL)?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Hecla Mining Company (NYSE:HL), and what that likely means for the prospects of the company and its stock.

Hecla Mining Company (NYSE:HL) has experienced an increase in hedge fund interest recently. At the end of this article we will also compare HL to other stocks including NovaGold Resources Inc. (USA) (NYSEAMEX:NG), Sanderson Farms, Inc. (NASDAQ:SAFM), and Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

claffra/Shutterstock.com

Now, let’s go over the latest action surrounding Hecla Mining Company (NYSE:HL).

Hedge fund activity in Hecla Mining Company (NYSE:HL)

Heading into the fourth quarter of 2016, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, up 27% from the previous quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in Hecla Mining Company (NYSE:HL), worth close to $27.4 million and accounting for less than 0.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $24.1 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish contain Jim Simons’s Renaissance Technologies, Chuck Royce’s Royce & Associates and Glenn Russell Dubin’s Highbridge Capital Management.

As aggregate interest increased, some big names were breaking ground themselves. BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, initiated the largest position in Hecla Mining Company (NYSE:HL). According to regulatory filings, the fund had $1.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new HL investors: Ken Griffin’s Citadel Investment Group, Paul Orlin and Alex Porter’s Amici Capital, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Hecla Mining Company (NYSE:HL) but similarly valued. These stocks are NovaGold Resources Inc. (USA) (NYSEAMEX:NG), Sanderson Farms, Inc. (NASDAQ:SAFM), Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), and Qunar Cayman Islands Ltd (NASDAQ:QUNR). All of these stocks’ market caps match HL’s market cap.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $235 million. That figure was $92 million in HL’s case. Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) is the most popular stock in this table. On the other hand Qunar Cayman Islands Ltd (NASDAQ:QUNR) is the least popular one with only 7 bullish hedge fund positions. Hecla Mining Company (NYSE:HL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PLAY might be a better candidate to consider a long position.

Disclosure: none.