With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Royal Gold, Inc (NASDAQ:RGLD).
Royal Gold, Inc (NASDAQ:RGLD) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 30. RGLD investors should be aware of an increase in support from the world’s most elite money managers recently. There were 17 hedge funds in our database with RGLD positions at the end of the first quarter. Our calculations also showed that RGLD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Iben of Kopernik Global Investors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Royal Gold, Inc (NASDAQ:RGLD).
Do Hedge Funds Think RGLD Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RGLD over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Royal Gold, Inc (NASDAQ:RGLD), which was worth $75.6 million at the end of the second quarter. On the second spot was Millennium Management which amassed $40.2 million worth of shares. Kopernik Global Investors, D E Shaw, and Horizon Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to Royal Gold, Inc (NASDAQ:RGLD), around 2.95% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, dishing out 0.71 percent of its 13F equity portfolio to RGLD.
Consequently, key money managers were breaking ground themselves. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), initiated the largest position in Royal Gold, Inc (NASDAQ:RGLD). Schonfeld Strategic Advisors had $2.6 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Ray Dalio’s Bridgewater Associates, and Renee Yao’s Neo Ivy Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Royal Gold, Inc (NASDAQ:RGLD). We will take a look at Luminar Technologies, Inc. (NASDAQ:LAZR), Voya Financial Inc (NYSE:VOYA), Cimarex Energy Co (NYSE:XEC), Credit Acceptance Corp. (NASDAQ:CACC), Scientific Games Corp (NASDAQ:SGMS), Apartment Income REIT Corp. (NYSE:AIRC), and RenaissanceRe Holdings Ltd. (NYSE:RNR). This group of stocks’ market valuations match RGLD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAZR | 21 | 193173 | 9 |
| VOYA | 44 | 983651 | 2 |
| XEC | 36 | 1134161 | -3 |
| CACC | 20 | 574521 | -3 |
| SGMS | 24 | 1451681 | 1 |
| AIRC | 14 | 479817 | 0 |
| RNR | 31 | 446197 | 1 |
| Average | 27.1 | 751886 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $752 million. That figure was $241 million in RGLD’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Apartment Income REIT Corp. (NYSE:AIRC) is the least popular one with only 14 bullish hedge fund positions. Royal Gold, Inc (NASDAQ:RGLD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RGLD is 38. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately RGLD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RGLD investors were disappointed as the stock returned -12.6% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
