Is New Gold Inc. (USA) (NYSEMKT:NGD) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
New Gold Inc. (USA) (NYSEMKT:NGD) was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. NGD investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 16 hedge funds in our database with NGD positions at the end of the previous quarter. At the end of this article we will also compare NGD to other stocks, including Exponent, Inc. (NASDAQ:EXPO), Crestwood Midstream Partners LP (NYSE:CMLP), and NovaGold Resources Inc. (USA) (NYSEMKT:NG) to get a better sense of its popularity.
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To most shareholders, hedge funds are seen as underperforming, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at the moment, Our researchers look at the moguls of this group, around 700 funds. These investment experts administer most of the smart money’s total capital, and by tailing their inimitable investments, Insider Monkey has found a number of investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, we’re going to take a look at the recent action encompassing New Gold Inc. (USA) (NYSEMKT:NGD).
What have hedge funds been doing with New Gold Inc. (USA) (NYSEMKT:NGD)?
At the Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital has the number one position in New Gold Inc. (USA) (NYSEMKT:NGD), worth close to $21.4 million, corresponding to 0.4% of its total 13F portfolio. Coming in second is David Iben of Kopernik Global Investors, with an $10.9 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Jim Simons’ Renaissance Technologies, Ray Dalio’s Bridgewater Associates, and Mitch Cantor’s Mountain Lake Investment Management.
Due to the fact that New Gold Inc. (USA) (NYSEMKT:NGD) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds that elected to cut their full holdings last quarter. At the top of the heap, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling close to $1.7 million in stock. Michael Platt and William Reeves’ fund, BlueCrest Capital Mgmt., also sold off its stock, about $1 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to New Gold Inc. (USA) (NYSEMKT:NGD). These stocks are Exponent, Inc. (NASDAQ:EXPO), Crestwood Midstream Partners LP (NYSE:CMLP), NovaGold Resources Inc. (USA) (NYSEMKT:NG), and Insmed Incorporated (NASDAQ:INSM). This group of stocks’ market values are similar to NGD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXPO | 9 | 68028 | -3 |
| CMLP | 6 | 15628 | 0 |
| NG | 17 | 276747 | 0 |
| INSM | 17 | 247410 | 1 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $152 million, versus $61 million in NGD’s case. NovaGold Resources Inc. (USA) (NYSEMKT:NG) is the most popular stock in this table. On the other hand Crestwood Midstream Partners LP (NYSE:CMLP) is the least popular one with only 6 bullish hedge fund positions. New Gold Inc. (USA) (NYSEMKT:NGD) 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 NG might be a better candidate to consider a long position.
