Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Osisko Gold Royalties Ltd (NYSE:OR) investors should be aware of an increase in hedge fund interest recently. OR was in 11 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 10 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to analyze the key hedge fund action surrounding Osisko Gold Royalties Ltd (NYSE:OR).
What have hedge funds been doing with Osisko Gold Royalties Ltd (NYSE:OR)?
At the end of the fourth quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in OR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Jim Simons’s Renaissance Technologies has the biggest position in Osisko Gold Royalties Ltd (NYSE:OR), worth close to $9 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Peter Franklin Palmedo of Sun Valley Gold, with a $5.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish encompass Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Eric Sprott’s Sprott Asset Management.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Osisko Gold Royalties Ltd (NYSE:OR). Marshall Wace LLP had $0.5 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Osisko Gold Royalties Ltd (NYSE:OR) but similarly valued. These stocks are Vector Group Ltd (NYSE:VGR), Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), Fresh Del Monte Produce Inc (NYSE:FDP), and Matson, Inc. (NYSE:MATX). All of these stocks’ market caps resemble OR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VGR | 20 | 158726 | 2 |
| VNDA | 19 | 376551 | -1 |
| FDP | 15 | 42866 | 1 |
| MATX | 12 | 17426 | 3 |
| Average | 16.5 | 148892 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $23 million in OR’s case. Vector Group Ltd (NYSE:VGR) is the most popular stock in this table. On the other hand Matson, Inc. (NYSE:MATX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Osisko Gold Royalties Ltd (NYSE:OR) is even less popular than MATX. Hedge funds clearly dropped the ball on OR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on OR as the stock returned 25.7% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
