Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Is Pretium Resources Inc (NYSE:PVG) worth your attention right now? The best stock pickers are becoming more confident. The number of bullish hedge fund bets rose by 5 in recent months. Our calculations also showed that PVG isn’t among the 30 most popular stocks among hedge funds.
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’ 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.
Let’s take a gander at the recent hedge fund action encompassing Pretium Resources Inc (NYSE:PVG).
What does the smart money think about Pretium Resources Inc (NYSE:PVG)?
At the end of the fourth quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the second quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in PVG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Robert Polak’s Anchor Bolt Capital has the largest call position in Pretium Resources Inc (NYSE:PVG), worth close to $30.6 million, amounting to 2.2% of its total 13F portfolio. The second most bullish fund manager is Sun Valley Gold, led by Peter Franklin Palmedo, holding a $25.5 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Eric Sprott’s Sprott Asset Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Roberto Mignone’s Bridger Management.
As aggregate interest increased, some big names were leading the bulls’ herd. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, established the most outsized position in Pretium Resources Inc (NYSE:PVG). Polar Capital had $15.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3.1 million investment in the stock during the quarter. The other funds with brand new PVG positions are Noam Gottesman’s GLG Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pretium Resources Inc (NYSE:PVG) but similarly valued. These stocks are CareTrust REIT, Inc. (NASDAQ:CTRE), The Simply Good Foods Company (NASDAQ:SMPL), Tower Semiconductor Ltd. (NASDAQ:TSEM), and Corcept Therapeutics Incorporated (NASDAQ:CORT). This group of stocks’ market values are closest to PVG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTRE | 16 | 125667 | 5 |
| SMPL | 25 | 184420 | 2 |
| TSEM | 16 | 222231 | 3 |
| CORT | 19 | 189942 | 4 |
| Average | 19 | 180565 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $124 million in PVG’s case. The Simply Good Foods Company (NASDAQ:SMPL) is the most popular stock in this table. On the other hand CareTrust REIT, Inc. (NASDAQ:CTRE) is the least popular one with only 16 bullish hedge fund positions. Pretium Resources Inc (NYSE:PVG) 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 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. Unfortunately PVG wasn’t nearly as popular as these 15 stock and hedge funds that were betting on PVG were disappointed as the stock returned -10.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
