We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in SSR Mining Inc. (NASDAQ:SSRM)? The smart money sentiment can provide an answer to this question.
SSR Mining Inc. (NASDAQ:SSRM) has seen an increase in hedge fund sentiment of late. SSRM was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 15 hedge funds in our database with SSRM holdings at the end of the previous quarter. Our calculations also showed that SSRM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Paulson of Paulson & Co
Now we’re going to take a peek at the fresh hedge fund action regarding SSR Mining Inc. (NASDAQ:SSRM).
What have hedge funds been doing with SSR Mining Inc. (NASDAQ:SSRM)?
Heading into the first quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in SSRM a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in SSR Mining Inc. (NASDAQ:SSRM) was held by Renaissance Technologies, which reported holding $113.7 million worth of stock at the end of September. It was followed by Millennium Management with a $29.9 million position. Other investors bullish on the company included Paulson & Co, Polar Capital, and Sprott Asset Management. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to SSR Mining Inc. (NASDAQ:SSRM), around 2.34% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, dishing out 0.7 percent of its 13F equity portfolio to SSRM.
Consequently, key hedge funds have jumped into SSR Mining Inc. (NASDAQ:SSRM) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the biggest position in SSR Mining Inc. (NASDAQ:SSRM). Polar Capital had $18.3 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors also made a $3.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and Nick Thakore’s Diametric Capital.
Let’s check out hedge fund activity in other stocks similar to SSR Mining Inc. (NASDAQ:SSRM). These stocks are Livongo Health, Inc. (NASDAQ:LVGO), FGL Holdings (NYSE:FG), MakeMyTrip Limited (NASDAQ:MMYT), and Glaukos Corporation (NYSE:GKOS). This group of stocks’ market valuations resemble SSRM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LVGO | 18 | 100042 | 2 |
| FG | 17 | 162275 | -8 |
| MMYT | 14 | 71965 | 4 |
| GKOS | 16 | 133423 | 4 |
| Average | 16.25 | 116926 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $230 million in SSRM’s case. Livongo Health, Inc. (NASDAQ:LVGO) is the most popular stock in this table. On the other hand MakeMyTrip Limited (NASDAQ:MMYT) is the least popular one with only 14 bullish hedge fund positions. SSR Mining Inc. (NASDAQ:SSRM) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately SSRM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SSRM investors were disappointed as the stock returned -30.3% 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 most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
