We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Osisko Gold Royalties Ltd (NYSE:OR).
Osisko Gold Royalties Ltd (NYSE:OR) was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. OR has experienced an increase in support from the world’s most elite money managers in recent months. There were 12 hedge funds in our database with OR positions at the end of the previous quarter. Our calculations also showed that OR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the key hedge fund action regarding Osisko Gold Royalties Ltd (NYSE:OR).
How have hedgies been trading Osisko Gold Royalties Ltd (NYSE:OR)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in OR over the last 17 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the largest position in Osisko Gold Royalties Ltd (NYSE:OR). Renaissance Technologies has a $16.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $12.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Peter Franklin Palmedo’s Sun Valley Gold, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Sun Valley Gold allocated the biggest weight to Osisko Gold Royalties Ltd (NYSE:OR), around 1.41% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 0.19 percent of its 13F equity portfolio to OR.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Sun Valley Gold, managed by Peter Franklin Palmedo, assembled the largest position in Osisko Gold Royalties Ltd (NYSE:OR). Sun Valley Gold had $5.1 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Andrew Weiss’s Weiss Asset Management, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Osisko Gold Royalties Ltd (NYSE:OR) but similarly valued. We will take a look at Covetrus, Inc. (NASDAQ:CVET), Herc Holdings Inc. (NYSE:HRI), Getty Realty Corp. (NYSE:GTY), and Synaptics Incorporated (NASDAQ:SYNA). This group of stocks’ market caps resemble OR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVET | 21 | 140444 | 1 |
| HRI | 26 | 565982 | 4 |
| GTY | 9 | 92245 | -1 |
| SYNA | 19 | 266720 | 6 |
| Average | 18.75 | 266348 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $266 million. That figure was $42 million in OR’s case. Herc Holdings Inc. (NYSE:HRI) is the most popular stock in this table. On the other hand Getty Realty Corp. (NYSE:GTY) is the least popular one with only 9 bullish hedge fund positions. Osisko Gold Royalties Ltd (NYSE:OR) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately OR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OR investors were disappointed as the stock returned -5.6% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
