Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Gold Fields Limited (ADR) (NYSE:GFI) from the perspective of those successful funds.
Gold Fields Limited (ADR) (NYSE:GFI) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. 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 Pool Corporation (NASDAQ:POOL), BWX Technologies Inc (NYSE:BWXT), and Popular Inc (NASDAQ:BPOP) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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How are hedge funds trading Gold Fields Limited (ADR) (NYSE:GFI)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. The graph below displays the number of hedge funds with bullish position in GFI over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, led by Cliff Asness, holds the largest position in Gold Fields Limited (ADR) (NYSE:GFI). AQR Capital Management has a $81.5 million position in the stock. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $65.3 million position. Remaining peers with similar optimism encompass Robert Polak’s Anchor Bolt Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Chuck Royce’s Royce & Associates. We should note that none of these hedge funds are 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.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that sold off their entire stakes in the stock during the third quarter. It’s worth mentioning that Jean-Marie Eveillard’s First Eagle Investment Management sold off the biggest stake of the 700 funds monitored by Insider Monkey, totaling close to $13.1 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $3.9 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Gold Fields Limited (ADR) (NYSE:GFI) but similarly valued. These stocks are Pool Corporation (NASDAQ:POOL), BWX Technologies Inc (NYSE:BWXT), Popular Inc (NASDAQ:BPOP), and CalAtlantic Group Inc (NYSE:CAA). All of these stocks’ market caps are closest to GFI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| POOL | 26 | 205269 | 3 |
| BWXT | 29 | 786752 | 6 |
| BPOP | 30 | 586643 | 3 |
| CAA | 36 | 630105 | 3 |
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $552 million. That figure was $255 million in GFI’s case. CalAtlantic Group Inc (NYSE:CAA) is the most popular stock in this table. On the other hand Pool Corporation (NASDAQ:POOL) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Gold Fields Limited (ADR) (NYSE:GFI) is even less popular than POOL. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
