We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like B2Gold Corp (NYSEMKT:BTG).
Is B2Gold Corp (NYSEMKT:BTG) a bargain? Investors who are in the know are taking a bearish view. The number of long hedge fund bets retreated by 3 lately. Our calculations also showed that BTG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BTG was in 14 hedge funds’ portfolios at the end of the third quarter of 2019. There were 17 hedge funds in our database with BTG holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the recent hedge fund action regarding B2Gold Corp (NYSEMKT:BTG).
Hedge fund activity in B2Gold Corp (NYSEMKT:BTG)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BTG over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in B2Gold Corp (NYSEMKT:BTG) was held by Renaissance Technologies, which reported holding $110.4 million worth of stock at the end of September. It was followed by GLG Partners with a $32.8 million position. Other investors bullish on the company included Arrowstreet Capital, Sprott Asset Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to B2Gold Corp (NYSEMKT:BTG), around 2.44% of its 13F portfolio. Moore Global Investments is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to BTG.
Since B2Gold Corp (NYSEMKT:BTG) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that slashed their full holdings in the third quarter. At the top of the heap, Lee Ainslie’s Maverick Capital dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth about $7.2 million in stock, and Mark Broach’s Manatuck Hill Partners was right behind this move, as the fund dumped about $0.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to B2Gold Corp (NYSEMKT:BTG). These stocks are United States Cellular Corporation (NYSE:USM), PBF Energy Inc (NYSE:PBF), Five9 Inc (NASDAQ:FIVN), and AppFolio Inc (NASDAQ:APPF). This group of stocks’ market valuations are closest to BTG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USM | 18 | 139096 | 3 |
| PBF | 28 | 245436 | 2 |
| FIVN | 31 | 579426 | 8 |
| APPF | 11 | 211977 | -1 |
| Average | 22 | 293984 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $294 million. That figure was $186 million in BTG’s case. Five9 Inc (NASDAQ:FIVN) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 11 bullish hedge fund positions. B2Gold Corp (NYSEMKT:BTG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on BTG as the stock returned 14.6% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
