Hedge Funds Are Buying Endeavour Silver Corp (EXK)

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Endeavour Silver Corp (NYSE:EXK) .

Endeavour Silver Corp (NYSE:EXK) investors should pay attention to an increase in hedge fund interest in recent months. EXK was in 8 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with EXK holdings at the end of the previous quarter. At the end of this article we will also compare EXK to other stocks including Vitamin Shoppe Inc (NYSE:VSI), Chase Corporation (NYSEAMEX:CCF), and NeoGenomics, Inc. (NASDAQ:NEO) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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Keeping this in mind, we’re going to take a glance at the latest action surrounding Endeavour Silver Corp (NYSE:EXK).

Hedge fund activity in Endeavour Silver Corp (NYSE:EXK)

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a boost of 14% from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in EXK heading into this year. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, has the most valuable position in Endeavour Silver Corp (NYSE:EXK), worth close to $25.9 million, amounting to less than 0.1% of its total 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, which manages a $16.1 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism comprise Eric Sprott’s Sprott Asset Management, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. We should note that Sprott Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, some big names have been driving this bullishness. LMR Partners, led by Ben Levine, Andrew Manuel and Stefan Renold, established the biggest position in Endeavour Silver Corp (NYSE:EXK). According to regulatory filings, the fund had $0.2 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new EXK investors: Ken Griffin’s Citadel Investment Group and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Endeavour Silver Corp (NYSE:EXK). We will take a look at Vitamin Shoppe Inc (NYSE:VSI), Chase Corporation (NYSEAMEX:CCF), NeoGenomics, Inc. (NASDAQ:NEO), and Nantkwest Inc (NASDAQ:NK). This group of stocks’ market valuations are closest to EXK’s market valuation.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $47 million in EXK’s case. Vitamin Shoppe Inc (NYSE:VSI) is the most popular stock in this table. On the other hand Nantkwest Inc (NASDAQ:NK) is the least popular one with only 6 bullish hedge fund positions. Endeavour Silver Corp (NYSE:EXK) 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 VSI might be a better candidate to consider taking a long position in.

Disclosure: none.