We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was First Majestic Silver Corp (NYSE:AG).
First Majestic Silver Corp (NYSE:AG) was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2019. AG investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. There were 15 hedge funds in our database with AG positions at the end of the previous quarter. Our calculations also showed that AG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Today there are numerous gauges market participants use to evaluate their stock investments. A pair of the most underrated gauges are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the broader indices by a significant amount (see the details here).
David E. Shaw of D.E. Shaw
Keeping this in mind we’re going to take a look at the key hedge fund action surrounding First Majestic Silver Corp (NYSE:AG).
What does smart money think about First Majestic Silver Corp (NYSE:AG)?
At Q4’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in AG 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.
More specifically, Renaissance Technologies was the largest shareholder of First Majestic Silver Corp (NYSE:AG), with a stake worth $43.2 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $13.9 million. Millennium Management, Citadel Investment Group, and Sprott Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to First Majestic Silver Corp (NYSE:AG), around 0.89% of its 13F portfolio. Signition LP is also relatively very bullish on the stock, setting aside 0.62 percent of its 13F equity portfolio to AG.
Consequently, key hedge funds have jumped into First Majestic Silver Corp (NYSE:AG) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in First Majestic Silver Corp (NYSE:AG). Arrowstreet Capital had $1.9 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and George Zweig, Shane Haas and Ravi Chander’s Signition LP.
Let’s also examine hedge fund activity in other stocks similar to First Majestic Silver Corp (NYSE:AG). We will take a look at California Water Service Group (NYSE:CWT), WESCO International, Inc. (NYSE:WCC), Dorman Products Inc. (NASDAQ:DORM), and Amicus Therapeutics, Inc. (NASDAQ:FOLD). This group of stocks’ market values are similar to AG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CWT | 20 | 43173 | 3 |
| WCC | 26 | 631182 | 6 |
| DORM | 13 | 54185 | -2 |
| FOLD | 35 | 854075 | 7 |
| Average | 23.5 | 395654 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $85 million in AG’s case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Dorman Products Inc. (NASDAQ:DORM) is the least popular one with only 13 bullish hedge fund positions. First Majestic Silver Corp (NYSE:AG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately AG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AG investors were disappointed as the stock returned -39.6% during the same time 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 most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
