Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. Trends reversed 180 degrees during the first quarter amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the first quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Alamos Gold Inc (NYSE:AGI).
Alamos Gold Inc (NYSE:AGI) was in 12 hedge funds’ portfolios at the end of the first quarter of 2019. AGI investors should pay attention to an increase in hedge fund sentiment of late. There were 11 hedge funds in our database with AGI holdings at the end of the previous quarter. Our calculations also showed that AGI isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most investors, hedge funds are viewed as unimportant, old financial vehicles of the past. While there are more than 8000 funds trading today, Our researchers look at the masters of this club, about 750 funds. Most estimates calculate that this group of people control the lion’s share of the hedge fund industry’s total capital, and by shadowing their matchless investments, Insider Monkey has unsheathed various investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Sander Gerber of Hudson Bay Capital
We’re going to go over the recent hedge fund action regarding Alamos Gold Inc (NYSE:AGI).
How are hedge funds trading Alamos Gold Inc (NYSE:AGI)?
At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AGI over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Sun Valley Gold was the largest shareholder of Alamos Gold Inc (NYSE:AGI), with a stake worth $33.5 million reported as of the end of March. Trailing Sun Valley Gold was Renaissance Technologies, which amassed a stake valued at $32.5 million. Royce & Associates, Arrowstreet Capital, and Polar Capital were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the most valuable position in Alamos Gold Inc (NYSE:AGI). Polar Capital had $16 million invested in the company at the end of the quarter. Alex Snow’s Lansdowne Partners also made a $8 million investment in the stock during the quarter. The other funds with brand new AGI positions are Sander Gerber’s Hudson Bay Capital Management, Mark Broach’s Manatuck Hill Partners, and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to Alamos Gold Inc (NYSE:AGI). These stocks are United Community Banks Inc (NASDAQ:UCBI), Sanmina Corporation (NASDAQ:SANM), G-III Apparel Group, Ltd. (NASDAQ:GIII), and Office Depot Inc (NASDAQ:ODP). This group of stocks’ market values match AGI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UCBI | 15 | 54356 | 1 |
| SANM | 18 | 208755 | 3 |
| GIII | 18 | 150459 | 5 |
| ODP | 22 | 78780 | -2 |
| Average | 18.25 | 123088 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $136 million in AGI’s case. Office Depot Inc (NASDAQ:ODP) is the most popular stock in this table. On the other hand United Community Banks Inc (NASDAQ:UCBI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Alamos Gold Inc (NYSE:AGI) is even less popular than UCBI. Hedge funds clearly dropped the ball on AGI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on AGI as the stock returned 10.8% during the same period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
