The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. What do these smart investors think about NovaGold Resources Inc. (NYSE:NG)?
Is NovaGold Resources Inc. (NYSE:NG) a buy here? Prominent investors are becoming hopeful. The number of long hedge fund positions improved by 6 in recent months. Our calculations also showed that NG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). NG was in 16 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with NG positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Paulson of Paulson & Co
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the key hedge fund action encompassing NovaGold Resources Inc. (NYSE:NG).
How have hedgies been trading NovaGold Resources Inc. (NYSE:NG)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in NG a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Paulson & Co was the largest shareholder of NovaGold Resources Inc. (NYSE:NG), with a stake worth $133.5 million reported as of the end of September. Trailing Paulson & Co was Kopernik Global Investors, which amassed a stake valued at $27.8 million. Empyrean Capital Partners, Levin Capital Strategies, and Odey Asset Management Group 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 NovaGold Resources Inc. (NYSE:NG), around 5.29% of its 13F portfolio. Paulson & Co is also relatively very bullish on the stock, earmarking 2.67 percent of its 13F equity portfolio to NG.
As aggregate interest increased, some big names have been driving this bullishness. Odey Asset Management Group, managed by Crispin Odey, established the most valuable position in NovaGold Resources Inc. (NYSE:NG). Odey Asset Management Group had $4.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $4.1 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Tudor Jones’s Tudor Investment Corp, and Cliff Asness’s AQR Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as NovaGold Resources Inc. (NYSE:NG) but similarly valued. These stocks are Euronav NV (NYSE:EURN), Cannae Holdings, Inc. (NYSE:CNNE), Federal Signal Corporation (NYSE:FSS), and Asbury Automotive Group, Inc. (NYSE:ABG). This group of stocks’ market caps match NG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EURN | 18 | 138289 | 2 |
| CNNE | 19 | 241748 | 0 |
| FSS | 19 | 77508 | -1 |
| ABG | 21 | 287252 | 4 |
| Average | 19.25 | 186199 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $212 million in NG’s case. Asbury Automotive Group, Inc. (NYSE:ABG) is the most popular stock in this table. On the other hand Euronav NV (NYSE:EURN) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks NovaGold Resources Inc. (NYSE:NG) is even less popular than EURN. Hedge funds clearly dropped the ball on NG as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on NG as the stock returned 14.7% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
