At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Galiano Gold Inc. (NYSE:GAU) makes for a good investment right now.
Is GAU a good stock to buy? Galiano Gold Inc. (NYSE:GAU) shareholders have witnessed an increase in enthusiasm from smart money of late. Galiano Gold Inc. (NYSE:GAU) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 10. There were 5 hedge funds in our database with GAU positions at the end of the fourth quarter. Our calculations also showed that GAU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Mario Gabelli of GAMCO Investors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $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. Now we’re going to go over the new hedge fund action surrounding Galiano Gold Inc. (NYSE:GAU).
Do Hedge Funds Think GAU Is A Good Stock To Buy Now?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GAU over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sun Valley Gold held the most valuable stake in Galiano Gold Inc. (NYSE:GAU), which was worth $27 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $3.4 million worth of shares. Citadel Investment Group, GAMCO Investors, and Two Sigma Advisors 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 Sun Valley Gold allocated the biggest weight to Galiano Gold Inc. (NYSE:GAU), around 9.61% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0042 percent of its 13F equity portfolio to GAU.
As industrywide interest jumped, some big names have been driving this bullishness. D E Shaw, managed by D. E. Shaw, assembled the biggest position in Galiano Gold Inc. (NYSE:GAU). D E Shaw had $0 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Galiano Gold Inc. (NYSE:GAU) but similarly valued. These stocks are Energous Corporation (NASDAQ:WATT), Orrstown Financial Services (NASDAQ:ORRF), Stratus Properties Inc. (NASDAQ:STRS), Professional Holding Corp. (NASDAQ:PFHD), Hamilton Beach Brands Holding Company (NYSE:HBB), Safe Bulkers, Inc. (NYSE:SB), and Great Ajax Corp (NYSE:AJX). This group of stocks’ market caps match GAU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WATT | 6 | 2777 | 1 |
| ORRF | 4 | 8233 | 0 |
| STRS | 3 | 38081 | 0 |
| PFHD | 3 | 20914 | 1 |
| HBB | 8 | 10151 | 2 |
| SB | 8 | 16324 | 3 |
| AJX | 11 | 9712 | 3 |
| Average | 6.1 | 15170 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.1 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $31 million in GAU’s case. Great Ajax Corp (NYSE:AJX) is the most popular stock in this table. On the other hand Stratus Properties Inc. (NASDAQ:STRS) is the least popular one with only 3 bullish hedge fund positions. Galiano Gold Inc. (NYSE:GAU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GAU is 42.8. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately GAU wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GAU investors were disappointed as the stock returned -6.3% since the end of March (through 6/25) 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.
Follow Galiano Gold Inc. (NYSE:GAU)
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Disclosure: None. This article was originally published at Insider Monkey.
