Is EMX Stock A Buy?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding EMX Royalty Corporation (NYSE:EMX).

Is EMX stock a buy? Hedge fund interest in EMX Royalty Corporation (NYSE:EMX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EMX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare EMX to other stocks including Iterum Therapeutics plc (NASDAQ:ITRM), Stellus Capital Investment Corporation (NYSE:SCM), and Ocwen Financial Corporation (NYSE:OCN) to get a better sense of its popularity.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Eric Sprott of Sprott Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the latest hedge fund action surrounding EMX Royalty Corporation (NYSE:EMX).

Do Hedge Funds Think EMX Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in EMX a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Sprott Asset Management, managed by Eric Sprott, holds the biggest position in EMX Royalty Corporation (NYSE:EMX). Sprott Asset Management has a $8.1 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Mountain Lake Investment Management, managed by Mitch Cantor, which holds a $2.5 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Mountain Lake Investment Management allocated the biggest weight to EMX Royalty Corporation (NYSE:EMX), around 1.43% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 0.49 percent of its 13F equity portfolio to EMX.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Mountain Lake Investment Management).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EMX Royalty Corporation (NYSE:EMX) but similarly valued. We will take a look at Iterum Therapeutics plc (NASDAQ:ITRM), Stellus Capital Investment Corporation (NYSE:SCM), Ocwen Financial Corporation (NYSE:OCN), Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), Braemar Hotels & Resorts Inc. (NYSE:BHR), MediciNova, Inc. (NASDAQ:MNOV), and Flexsteel Industries, Inc. (NASDAQ:FLXS). All of these stocks’ market caps resemble EMX’s market cap.

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As you can see these stocks had an average of 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $11 million in EMX’s case. Braemar Hotels & Resorts Inc. (NYSE:BHR) is the most popular stock in this table. On the other hand Stellus Capital Investment Corporation (NYSE:SCM) is the least popular one with only 3 bullish hedge fund positions. EMX Royalty Corporation (NYSE:EMX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EMX is 38.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on EMX as the stock returned 10.5% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.