In this article we will check out the progression of hedge fund sentiment towards Fury Gold Mines Limited (NYSE:FURY) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is FURY a good stock to buy? Investors who are in the know were in a pessimistic mood. The number of long hedge fund bets dropped by 1 in recent months. Fury Gold Mines Limited (NYSE:FURY) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 4. Our calculations also showed that FURY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 we’re going to view the key hedge fund action encompassing Fury Gold Mines Limited (NYSE:FURY).
Do Hedge Funds Think FURY Is A Good Stock To Buy Now?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in FURY a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the most valuable position in Fury Gold Mines Limited (NYSE:FURY), worth close to $1 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Fury Gold Mines Limited (NYSE:FURY), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0012 percent of its 13F equity portfolio to FURY.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 none of the 750+ hedge funds tracked by Insider Monkey identified FURY as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Fury Gold Mines Limited (NYSE:FURY) but similarly valued. We will take a look at Kingstone Companies Inc (NASDAQ:KINS), Ault Global Holdings, Inc. (NYSE:DPW), Electromed, Inc. (NYSE:ELMD), FAT Brands Inc. (NASDAQ:FAT), Entera Bio Ltd. (NASDAQ:ENTX), Baudax Bio, Inc. (NASDAQ:BXRX), and ARC Document Solutions Inc (NYSE:ARC). This group of stocks’ market valuations match FURY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KINS | 1 | 4109 | 0 |
| DPW | 3 | 1915 | 2 |
| ELMD | 5 | 3720 | -1 |
| FAT | 4 | 6123 | 1 |
| ENTX | 2 | 606 | 0 |
| BXRX | 4 | 563 | -5 |
| ARC | 6 | 13716 | 0 |
| Average | 3.6 | 4393 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $1 million in FURY’s case. ARC Document Solutions Inc (NYSE:ARC) is the most popular stock in this table. On the other hand Kingstone Companies Inc (NASDAQ:KINS) is the least popular one with only 1 bullish hedge fund positions. Fury Gold Mines Limited (NYSE:FURY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FURY is 46.5. 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. 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 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 surpassed the market again by 3.3 percentage points. Unfortunately FURY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FURY investors were disappointed as the stock returned 4% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.