The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Nevsun Resources (USA) (NYSEMKT:NSU).
Nevsun Resources (USA) (NYSEMKT:NSU) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of September, same as at the end of June. At the end of this article we will also compare NSU to other stocks including GMS Inc (NYSE:GMS), Penn West Petroleum Ltd (USA) (NYSE:PWE), and General American Investors Co. Inc. (NYSE:GAM) to get a better sense of its popularity.
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Follow Nevsun Resources Ltd (NYSEMKT:NSU)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What have hedge funds been doing with Nevsun Resources (USA) (NYSEMKT:NSU)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards NSU over the last 5 quarters, which has seen only a minor uptick in Q2 during that time. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eric Sprott’s Sprott Asset Management has the biggest position in Nevsun Resources (USA) (NYSEMKT:NSU), worth close to $31.7 million, corresponding to 1.1% of its total 13F portfolio. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $15.4 million position. Other professional money managers that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’ AQR Capital Management, and David E. Shaw’s D E Shaw. We should note that Sprott Asset Management is among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. Intriguingly, Jacob Gottlieb’s Visium Asset Management dropped the largest investment of all the investors followed by Insider Monkey, valued at about $3.7 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also dumped its small position in the stock during Q3.
Let’s now review hedge fund activity in other stocks similar to Nevsun Resources (USA) (NYSEMKT:NSU). These stocks are GMS Inc (NYSE:GMS), Penn West Petroleum Ltd (USA) (NYSE:PWE), General American Investors Co. Inc. (NYSE:GAM), and Capstead Mortgage Corporation (NYSE:CMO). All of these stocks’ market caps are similar to NSU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GMS | 10 | 37828 | -2 |
| PWE | 13 | 48595 | 1 |
| GAM | 4 | 15051 | 4 |
| CMO | 9 | 36287 | -2 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $61 million in NSU’s case. Penn West Petroleum Ltd (USA) (NYSE:PWE) is the most popular stock in this table. On the other hand General American Investors Co. Inc. (NYSE:GAM) is the least popular one with only 4 bullish hedge fund positions. Nevsun Resources (USA) (NYSEMKT:NSU) 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. In this regard PWE might be a better candidate to consider taking a long position in.
Disclosure: None
