We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Goldcorp Inc. (NYSE:GG).
Goldcorp Inc. (NYSE:GG) investors should be aware of an increase in activity from the world’s largest hedge funds lately. GG was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 18 hedge funds in our database with GG positions at the end of the previous quarter. Our calculations also showed that GG isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s check out the recent hedge fund action regarding Goldcorp Inc. (NYSE:GG).
What have hedge funds been doing with Goldcorp Inc. (NYSE:GG)?
Heading into the first quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in GG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Goldcorp Inc. (NYSE:GG), with a stake worth $26.1 million reported as of the end of September. Trailing Arrowstreet Capital was Millennium Management, which amassed a stake valued at $25.1 million. Polar Capital, Citadel Investment Group, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers have jumped into Goldcorp Inc. (NYSE:GG) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in Goldcorp Inc. (NYSE:GG). Arrowstreet Capital had $26.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $25.1 million position during the quarter. The following funds were also among the new GG investors: Brian Ashford-Russell and Tim Woolley’s Polar Capital, David Greenspan’s Slate Path Capital, and Bruce Kovner’s Caxton Associates LP.
Let’s now review hedge fund activity in other stocks similar to Goldcorp Inc. (NYSE:GG). We will take a look at Vail Resorts, Inc. (NYSE:MTN), Huazhu Group Limited (NASDAQ:HTHT), BeiGene, Ltd. (NASDAQ:BGNE), and Ralph Lauren Corporation (NYSE:RL). This group of stocks’ market valuations are closest to GG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTN | 26 | 544655 | -4 |
| HTHT | 15 | 147112 | 1 |
| BGNE | 15 | 1967050 | -8 |
| RL | 31 | 753923 | 3 |
| Average | 21.75 | 853185 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $853 million. That figure was $183 million in GG’s case. Ralph Lauren Corporation (NYSE:RL) is the most popular stock in this table. On the other hand Huazhu Group Limited (NASDAQ:HTHT) is the least popular one with only 15 bullish hedge fund positions. Goldcorp Inc. (NYSE:GG) 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 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately GG wasn’t in this group. Hedge funds that bet on GG were disappointed as the stock returned 10.9% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
