It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of 6 percentage points during the first 5 months of 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Barrick Gold Corporation (NASDAQ:GOLD).
Is Barrick Gold Corporation (NASDAQ:GOLD) an outstanding investment right now? Investors who are in the know are getting more bullish. The number of long hedge fund bets rose by 1 recently. Our calculations also showed that gold isn’t among the 30 most popular stocks among hedge funds. GOLD was in 37 hedge funds’ portfolios at the end of the first quarter of 2019. There were 36 hedge funds in our database with GOLD holdings at the end of the previous quarter.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
We’re going to analyze the latest hedge fund action encompassing Barrick Gold Corporation (NASDAQ:GOLD).
Hedge fund activity in Barrick Gold Corporation (NASDAQ:GOLD)
At Q1’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2018. By comparison, 25 hedge funds held shares or bullish call options in GOLD 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.
The largest stake in Barrick Gold Corporation (NASDAQ:GOLD) was held by Slate Path Capital, which reported holding $157.9 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $136.3 million position. Other investors bullish on the company included Adage Capital Management, Odey Asset Management Group, and Millennium Management.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Odey Asset Management Group, managed by Crispin Odey, assembled the most outsized position in Barrick Gold Corporation (NASDAQ:GOLD). Odey Asset Management Group had $104.6 million invested in the company at the end of the quarter. John Paulson’s Paulson & Co also made a $27.9 million investment in the stock during the quarter. The following funds were also among the new GOLD investors: Eric Sprott’s Sprott Asset Management, Charles Davidson and Joseph Jacobs’s Wexford Capital, and Louis Bacon’s Moore Global Investments.
Let’s also examine hedge fund activity in other stocks similar to Barrick Gold Corporation (NASDAQ:GOLD). We will take a look at TransDigm Group Incorporated (NYSE:TDG), Royal Caribbean Cruises Ltd. (NYSE:RCL), Hormel Foods Corporation (NYSE:HRL), and The Hershey Company (NYSE:HSY). This group of stocks’ market values are similar to GOLD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TDG | 52 | 4683686 | 5 |
| RCL | 47 | 1572558 | -5 |
| HRL | 15 | 138242 | -3 |
| HSY | 22 | 541491 | -11 |
| Average | 34 | 1733994 | -3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1734 million. That figure was $956 million in GOLD’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Hormel Foods Corporation (NYSE:HRL) is the least popular one with only 15 bullish hedge fund positions. Barrick Gold Corporation (NASDAQ:GOLD) 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately GOLD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GOLD were disappointed as the stock returned -13.7% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
