Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds.
Newmont Goldcorp Corporation (NYSE:NEM) has seen an increase in hedge fund sentiment in recent months. NEM was in 41 hedge funds’ portfolios at the end of June. There were 35 hedge funds in our database with NEM holdings at the end of the previous quarter. Our calculations also showed that NEM isn’t among the 30 most popular stocks among hedge funds (see the video below).
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a peek at the new hedge fund action regarding Newmont Goldcorp Corporation (NYSE:NEM).
How have hedgies been trading Newmont Goldcorp Corporation (NYSE:NEM)?
At Q2’s end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in NEM over the last 16 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Newmont Goldcorp Corporation (NYSE:NEM), which was worth $207.9 million at the end of the second quarter. On the second spot was Two Sigma Advisors which amassed $93.4 million worth of shares. Moreover, GLG Partners, Millennium Management, and AQR Capital Management were also bullish on Newmont Goldcorp Corporation (NYSE:NEM), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, some big names were leading the bulls’ herd. Chiron Investment Management, managed by Ryan Caldwell, assembled the most valuable position in Newmont Goldcorp Corporation (NYSE:NEM). Chiron Investment Management had $11.4 million invested in the company at the end of the quarter. Joe Milano’s Greenhouse Funds also initiated a $11 million position during the quarter. The other funds with new positions in the stock are Karim Abbadi and Edward McBride’s Centiva Capital, Peter Franklin Palmedo’s Sun Valley Gold, and Michael A. Price and Amos Meron’s Empyrean Capital Partners.
Let’s check out hedge fund activity in other stocks similar to Newmont Goldcorp Corporation (NYSE:NEM). These stocks are Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), Canon Inc. (NYSE:CAJ), Square, Inc. (NYSE:SQ), and Shopify Inc (NYSE:SHOP). This group of stocks’ market caps match NEM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ERIC | 19 | 415250 | -1 |
| CAJ | 6 | 87599 | -1 |
| SQ | 53 | 2056333 | 3 |
| SHOP | 26 | 2201348 | 1 |
| Average | 26 | 1190133 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $1190 million. That figure was $778 million in NEM’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 6 bullish hedge fund positions. Newmont Goldcorp Corporation (NYSE:NEM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NEM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NEM were disappointed as the stock returned -1.1% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
