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.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Newmont Corporation (NYSE:NEM).
Newmont Corporation (NYSE:NEM) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that NEM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the new hedge fund action surrounding Newmont Corporation (NYSE:NEM).
How have hedgies been trading Newmont Corporation (NYSE:NEM)?
Heading into the first quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NEM over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Newmont Corporation (NYSE:NEM), which was worth $401.2 million at the end of the third quarter. On the second spot was International Value Advisers which amassed $86.8 million worth of shares. AQR Capital Management, Millennium Management, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Newmont Corporation (NYSE:NEM), around 7.21% of its 13F portfolio. Anchor Bolt Capital is also relatively very bullish on the stock, designating 3.68 percent of its 13F equity portfolio to NEM.
Since Newmont Corporation (NYSE:NEM) has faced bearish sentiment from the smart money, it’s easy to see that there exists a select few money managers that decided to sell off their entire stakes last quarter. Interestingly, Joe Milano’s Greenhouse Funds cut the biggest stake of all the hedgies watched by Insider Monkey, valued at close to $11.3 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dumped about $6.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 10 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Newmont Corporation (NYSE:NEM). We will take a look at NXP Semiconductors NV (NASDAQ:NXPI), The Travelers Companies, Inc. (NYSE:TRV), Canadian Pacific Railway Limited (NYSE:CP), and Carnival Corporation & Plc (NYSE:CCL). This group of stocks’ market values are closest to NEM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NXPI | 80 | 3769335 | 18 |
| TRV | 39 | 906120 | 1 |
| CP | 29 | 1760164 | -4 |
| CCL | 34 | 895329 | 4 |
| Average | 45.5 | 1832737 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.5 hedge funds with bullish positions and the average amount invested in these stocks was $1833 million. That figure was $990 million in NEM’s case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Canadian Pacific Railway Limited (NYSE:CP) is the least popular one with only 29 bullish hedge fund positions. Newmont Corporation (NYSE:NEM) is not the least popular stock in this group but hedge fund interest is still below average. 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 11.7% in 2020 through March 11th but still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on NEM as the stock returned 6.2% during the same time period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
