Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The fourth quarter of 2018 is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 7 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Barrick Gold Corporation (NYSE:GOLD).
Is Barrick Gold Corporation (NYSE:GOLD) an outstanding investment today? Hedge funds are betting on the stock. The number of bullish hedge fund positions went up by 3 recently. Our calculations also showed that GOLD isn’t among the 30 most popular stocks among hedge funds. GOLD was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 33 hedge funds in our database with GOLD positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the fresh hedge fund action encompassing Barrick Gold Corporation.
What does the smart money think about Barrick Gold Corporation (NYSE:GOLD)?
At Q4’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in GOLD a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matt Simon (Citadel)’s Ashler Capital has the biggest position in Barrick Gold Corporation (NYSE:GOLD), worth close to $141.3 million, accounting for 10.5% of its total 13F portfolio. Sitting at the No. 2 spot is David Greenspan of Slate Path Capital, with a $135.1 million position; the fund has 15.2% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of Phill Gross and Robert Atchinson’s Adage Capital Management, and Israel Englander’s Millennium Management.
With a general bullishness amongst the heavyweights, key money managers have jumped into Barrick Gold Corporation headfirst. Ashler Capital, managed by Matt Simon (Citadel), established the biggest position in Barrick Gold Corporation. Ashler Capital had $141.3 million invested in the company at the end of the quarter. Daniel Lascano’s Lomas Capital Management also initiated a $32.4 million position during the quarter. The other funds with brand new GOLD positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Halpert’s Prince Street Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Barrick Gold Corporation but similarly valued. These stocks are AmerisourceBergen Corporation (NYSE:ABC), AMETEK, Inc. (NYSE:AME), Ball Corporation (NYSE:BLL), and Liberty Global Plc (NASDAQ:LBTYK). This group of stocks’ market caps match GOLD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABC | 34 | 381338 | 2 |
| AME | 32 | 885804 | -1 |
| BLL | 33 | 628419 | 13 |
| LBTYK | 32 | 2957690 | -9 |
| Average | 32.75 | 1213313 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1213 million. That figure was $792 million in GOLD’s case. AmerisourceBergen Corporation (NYSE:ABC) is the most popular stock in this table. On the other hand AMETEK, Inc. (NYSE:AME) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks Barrick Gold Corporation is more popular among hedge funds. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on GOLD as the stock returned 27.2% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
