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. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. 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 Energy Fuels Inc (NYSEMKT:UUUU) .
Is Energy Fuels Inc (NYSEMKT:UUUU) a buy here? Prominent investors are surely getting less optimistic. The number of bullish hedge fund bets slashed by 1 in recent months. UUUU was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 7 hedge funds in our database with UUUU holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Neos Therapeutics Inc (NASDAQ:NEOS), Taseko Mines Limited (USA) (NYSEMKT:TGB), and Camtek LTD. (NASDAQ:CAMT) to gather more data points.
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.
AlexKZ/Shutterstock.com
How are hedge funds trading Energy Fuels Inc (NYSEMKT:UUUU)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 14% decline from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UUUU over the last 5 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Eric Sprott’s Sprott Asset Management has the largest position in Energy Fuels Inc (NYSEMKT:UUUU), worth close to $0.9 million. On Sprott Asset Management’s heels is CQS Cayman LP, led by Michael Hintze, which holds a $0.7 million position. Some other professional money managers that are bullish encompass J. Carlo Cannell’s Cannell Capital, Israel Englander’s Millennium Management, one of the largest hedge funds in the world, and Matthew Hulsizer’s PEAK6 Capital Management. 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-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually cashed in their positions entirely. At the top of the heap, Benjamin A. Smith’s Laurion Capital Management cashed in the largest stake of the 700 funds watched by Insider Monkey, valued at close to $0.3 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund dropped about $0.1 million worth of shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Energy Fuels Inc (NYSEMKT:UUUU) but similarly valued. These stocks are Neos Therapeutics Inc (NASDAQ:NEOS), Taseko Mines Limited (USA) (NYSEMKT:TGB), Camtek LTD. (NASDAQ:CAMT), and SeaChange International (NASDAQ:SEAC). This group of stocks’ market caps are similar to UUUU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NEOS | 5 | 6246 | -1 |
| TGB | 4 | 6137 | 0 |
| CAMT | 4 | 4341 | 0 |
| SEAC | 9 | 27512 | -1 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $3 million in UUUU’s case. SeaChange International (NASDAQ:SEAC) is the most popular stock in this table. On the other hand Taseko Mines Limited (USA) (NYSEMKT:TGB) is the least popular one with only 4 bullish hedge fund positions. Energy Fuels Inc (NYSEMKT:UUUU) 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 SEAC might be a better candidate to consider taking a long position in.
Disclosure: None
