How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding SSR Mining Inc. (NASDAQ:SSRM).
SSR Mining Inc. (NASDAQ:SSRM) investors should pay attention to a decrease in hedge fund sentiment in recent months. SSR Mining Inc. (NASDAQ:SSRM) was in 16 hedge funds’ portfolios at the end of March. The all time high for this statistic is 22. Our calculations also showed that SSRM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Eric Sprott of Sprott Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s go over the fresh hedge fund action surrounding SSR Mining Inc. (NASDAQ:SSRM).
Do Hedge Funds Think SSRM Is A Good Stock To Buy Now?
At the end of March, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the fourth quarter of 2020. By comparison, 22 hedge funds held shares or bullish call options in SSRM a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of SSR Mining Inc. (NASDAQ:SSRM), with a stake worth $47.6 million reported as of the end of March. Trailing Renaissance Technologies was Sprott Asset Management, which amassed a stake valued at $32.6 million. Millennium Management, Polar Capital, and Paulson & Co 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 NewGen Asset Management allocated the biggest weight to SSR Mining Inc. (NASDAQ:SSRM), around 5.9% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, designating 3.67 percent of its 13F equity portfolio to SSRM.
Since SSR Mining Inc. (NASDAQ:SSRM) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedge funds who sold off their positions entirely heading into Q2. It’s worth mentioning that Louis Bacon’s Moore Global Investments dropped the biggest investment of the “upper crust” of funds watched by Insider Monkey, valued at about $5.9 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund said goodbye to about $4.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q2.
Let’s check out hedge fund activity in other stocks similar to SSR Mining Inc. (NASDAQ:SSRM). These stocks are Rent-A-Center Inc (NASDAQ:RCII), Southwestern Energy Company (NYSE:SWN), Arcosa, Inc. (NYSE:ACA), Relay Therapeutics, Inc. (NASDAQ:RLAY), Commscope Holding Company Inc (NASDAQ:COMM), Independent Bank Group Inc (NASDAQ:IBTX), and Freedom Holding Corp. (NASDAQ:FRHC). All of these stocks’ market caps match SSRM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RCII | 26 | 487953 | 4 |
| SWN | 22 | 207392 | 1 |
| ACA | 17 | 220346 | 0 |
| RLAY | 20 | 636649 | 3 |
| COMM | 32 | 757950 | -3 |
| IBTX | 9 | 74670 | -5 |
| FRHC | 12 | 55186 | 4 |
| Average | 19.7 | 348592 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $349 million. That figure was $178 million in SSRM’s case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand Independent Bank Group Inc (NASDAQ:IBTX) is the least popular one with only 9 bullish hedge fund positions. SSR Mining Inc. (NASDAQ:SSRM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SSRM is 40. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately SSRM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SSRM investors were disappointed as the stock returned 7.5% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Ssr Mining Inc. (NASDAQ:SSRM)
Follow Ssr Mining Inc. (NASDAQ:SSRM)
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Disclosure: None. This article was originally published at Insider Monkey.
