Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Yamana Gold Inc. (NYSE:AUY) investors should be aware of an increase in hedge fund interest lately. AUY was in 19 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 18 hedge funds in our database with AUY positions at the end of the previous quarter. Our calculations also showed that AUY 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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to review the key hedge fund action encompassing Yamana Gold Inc. (NYSE:AUY).
What have hedge funds been doing with Yamana Gold Inc. (NYSE:AUY)?
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in AUY over the last 14 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Yamana Gold Inc. (NYSE:AUY), with a stake worth $26.6 million reported as of the end of September. Trailing Renaissance Technologies was Prince Street Capital Management, which amassed a stake valued at $10.6 million. AQR Capital Management, Citadel Investment Group, and Arrowstreet Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key money managers have jumped into Yamana Gold Inc. (NYSE:AUY) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Yamana Gold Inc. (NYSE:AUY). Arrowstreet Capital had $6.1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Peter S. Stamos’s Stamos Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Yamana Gold Inc. (NYSE:AUY). We will take a look at NuStar Energy L.P. (NYSE:NS), Penn National Gaming, Inc (NASDAQ:PENN), Pan American Silver Corp. (NASDAQ:PAAS), and BlackLine, Inc. (NASDAQ:BL). All of these stocks’ market caps are closest to AUY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NS | 2 | 4998 | 0 |
| PENN | 18 | 103334 | -6 |
| PAAS | 15 | 152840 | 0 |
| BL | 13 | 206865 | 0 |
| Average | 12 | 117009 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $78 million in AUY’s case. Penn National Gaming, Inc (NASDAQ:PENN) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Yamana Gold Inc. (NYSE:AUY) is more popular among hedge funds. 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 AUY wasn’t nearly as popular as these 15 stock and hedge funds that were betting on AUY were disappointed as the stock returned -7.5% 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.
