The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Sibanye Gold Ltd (NYSE:SBGL) from the perspective of those elite funds.
Sibanye Gold Ltd (NYSE:SBGL) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of March. At the end of this article we will also compare SBGL to other stocks including Halozyme Therapeutics, Inc. (NASDAQ:HALO), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and Aphria Inc. (NYSE:APHA) to get a better sense of its popularity.
In the eyes of most shareholders, hedge funds are seen as unimportant, old financial tools of the past. While there are greater than 8000 funds with their doors open today, Our researchers choose to focus on the aristocrats of this club, around 750 funds. Most estimates calculate that this group of people watch over bulk of all hedge funds’ total asset base, and by watching their matchless stock picks, Insider Monkey has determined various investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We’re going to take a gander at the latest hedge fund action surrounding Sibanye Gold Ltd (NYSE:SBGL).
How have hedgies been trading Sibanye Gold Ltd (NYSE:SBGL)?
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SBGL over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sibanye Gold Ltd (NYSE:SBGL) was held by Renaissance Technologies, which reported holding $16.2 million worth of stock at the end of March. It was followed by D E Shaw with a $13.8 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and GLG Partners.
Seeing as Sibanye Gold Ltd (NYSE:SBGL) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few money managers that decided to sell off their full holdings in the third quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $1.2 million in stock, and Eric Sprott’s Sprott Asset Management was right behind this move, as the fund sold off about $0.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sibanye Gold Ltd (NYSE:SBGL) but similarly valued. We will take a look at Halozyme Therapeutics, Inc. (NASDAQ:HALO), Bed Bath & Beyond Inc. (NASDAQ:BBBY), Aphria Inc. (NYSE:APHA), and Centennial Resource Development, Inc. (NASDAQ:CDEV). All of these stocks’ market caps match SBGL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HALO | 18 | 73646 | 2 |
| BBBY | 29 | 478941 | -1 |
| APHA | 9 | 8864 | 3 |
| CDEV | 15 | 127236 | 1 |
| Average | 17.75 | 172172 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $55 million in SBGL’s case. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is the most popular stock in this table. On the other hand Aphria Inc. (NYSE:APHA) is the least popular one with only 9 bullish hedge fund positions. Sibanye Gold Ltd (NYSE:SBGL) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SBGL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SBGL investors were disappointed as the stock returned 0.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
