Is Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS) a splendid investment now? Prominent investors are taking a pessimistic view. The number of long hedge fund bets fell by 1 recently. 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 Marrone Bio Innovations Inc (NASDAQ:MBII), Aptose Biosciences Inc (NASDAQ:APTO), and Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX) to gather more data points.
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Now, we’re going to take a gander at the new action encompassing Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS).
How have hedgies been trading Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the hedgies followed by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS). Renaissance Technologies has a $1.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which held a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Ken Griffin’s Citadel Investment Group, and John Horseman’s Horseman Capital Management.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: GRT Capital Partners. 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 only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was “Citadel Investment Group).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS) but similarly valued. These stocks are Marrone Bio Innovations Inc (NASDAQ:MBII), Aptose Biosciences Inc (NASDAQ:APTO), Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX), and Profire Energy, Inc. (NASDAQ:PFIE). This group of stocks’ market values match GSS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MBII | 4 | 4106 | -1 |
| APTO | 6 | 5295 | 0 |
| CYTX | 4 | 1254 | -2 |
| PFIE | 5 | 2535 | 0 |
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million.That figure was $2 millions in GSS’s case. Aptose Biosciences Inc (NASDAQ:APTO) is the most popular stock in this table. On the other hand Marrone Bio Innovations Inc (NASDAQ:MBII) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS) is even less popular than MBII. Considering that hedge funds aren’t fond of this stock, 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.
