Is it smart to be bullish on Randgold Resources Ltd. (ADR) (NASDAQ:GOLD)?
Now, according to many market players, hedge funds are perceived as overrated, outdated investment tools of an era lost to time. Although there are more than 8,000 hedge funds trading in present day, this site looks at the leaders of this club, around 525 funds. Analysts calculate that this group controls the majority of the smart money’s total assets, and by watching their highest performing investments, we’ve found a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as crucial, optimistic insider trading sentiment is another way to analyze the financial markets. Obviously, there are many reasons for an executive to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this tactic if investors understand where to look (learn more here).
Now that that’s out of the way, let’s examine the recent info surrounding Randgold Resources Ltd. (ADR) (NASDAQ:GOLD).
What have hedge funds been doing with Randgold Resources Ltd. (ADR) (NASDAQ:GOLD)?
At the end of the second quarter, a total of 17 of the hedge funds we track were bullish in this stock, a change of 42% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly.
Out of the hedge funds we follow, First Eagle Investment Management, managed by Matt McLennan, holds the largest position in Randgold Resources Ltd. (ADR) (NASDAQ:GOLD). First Eagle Investment Management has a $78 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is John Paulson of Paulson & Co, with a $42.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Jim Simons’s Renaissance Technologies, Chuck Royce’s Royce & Associates and D. E. Shaw’s D E Shaw.
Now, particular hedge funds were breaking ground themselves. First Eagle Investment Management, managed by Matt McLennan, initiated the biggest position in Randgold Resources Ltd. (ADR) (NASDAQ:GOLD). First Eagle Investment Management had 78 million invested in the company at the end of the quarter. John Paulson’s Paulson & Co also made a $42.9 million investment in the stock during the quarter. The following funds were also among the new GOLD investors: Jim Simons’s Renaissance Technologies, Chuck Royce’s Royce & Associates, and D. E. Shaw’s D E Shaw.
How have insiders been trading Randgold Resources Ltd. (ADR) (NASDAQ:GOLD)?
Legal insider trading, particularly when it’s bullish, is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the last half-year time frame, Randgold Resources Ltd. (ADR) (NASDAQ:GOLD) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Randgold Resources Ltd. (ADR) (NASDAQ:GOLD). These stocks are Eldorado Gold Corp (USA) (NYSE:EGO), Kinross Gold Corporation (USA) (NYSE:KGC), AngloGold Ashanti Limited (ADR) (NYSE:AU), Agnico-Eagle Mines Limited (USA) (NYSE:AEM), and Compania de Minas Buenaventura SA (ADR) (NYSE:BVN). This group of stocks belong to the gold industry and their market caps resemble GOLD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Eldorado Gold Corp (USA) (NYSE:EGO) | 21 | 0 | 0 |
| Kinross Gold Corporation (USA) (NYSE:KGC) | 22 | 0 | 0 |
| AngloGold Ashanti Limited (ADR) (NYSE:AU) | 19 | 0 | 0 |
| Agnico-Eagle Mines Limited (USA) (NYSE:AEM) | 18 | 0 | 0 |
| Compania de Minas Buenaventura SA (ADR) (NYSE:BVN) | 9 | 0 | 0 |
Using the returns explained by our analyses, regular investors should always watch hedge fund and insider trading sentiment, and Randgold Resources Ltd. (ADR) (NASDAQ:GOLD) applies perfectly to this mantra.
