It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Harmony Gold Mining Co. (ADR) (NYSE:HMY).
Is Harmony Gold Mining Co. (ADR) (NYSE:HMY) a buy right now? Hedge funds are unambiguously in a bearish mood. The number of bullish hedge fund bets fell by 4 in recent months. HMY was in 7 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with HMY holdings at the end of the previous quarter. At the end of this article we will also compare HMY to other stocks including AAON, Inc. (NASDAQ:AAON), II-VI, Inc. (NASDAQ:IIVI), and Belmond Ltd (NYSE:BEL) to get a better sense of its popularity.
Follow Harmony Gold Mining Co Ltd (NYSE:HMY)
Follow Harmony Gold Mining Co Ltd (NYSE:HMY)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How have hedgies been trading Harmony Gold Mining Co. (ADR) (NYSE:HMY)?
Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a fall of 36% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in HMY over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the biggest hedge funds in the world, holds the biggest position in Harmony Gold Mining Co. (ADR) (NYSE:HMY). Renaissance Technologies has a $20.6 million position in the stock. Coming in second is Two Sigma Advisors, led by John Overdeck and David Siegel, which holds a $3.3 million position. Other professional money managers that hold long positions comprise Israel Englander’s Millennium Management, Cliff Asness’ AQR Capital Management and Louis Navellier’s Navellier & 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.
Due to the fact that Harmony Gold Mining Co. (ADR) (NYSE:HMY) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of funds that decided to sell off their positions entirely in the third quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest position of all the hedgies watched by Insider Monkey, comprising about $8.3 million in stock, and Paul Tudor Jones’ Tudor Investment Corp was right behind this move, as the fund cut about $0.1 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Harmony Gold Mining Co. (ADR) (NYSE:HMY) but similarly valued. These stocks are AAON, Inc. (NASDAQ:AAON), II-VI, Inc. (NASDAQ:IIVI), Belmond Ltd (NYSE:BEL), and WNS (Holdings) Limited (ADR) (NYSE:WNS). This group of stocks’ market values resemble HMY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AAON | 9 | 31228 | -3 |
| IIVI | 20 | 91987 | 2 |
| BEL | 12 | 103184 | -3 |
| WNS | 11 | 64725 | 0 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $29 million in HMY’s case. II-VI, Inc. (NASDAQ:IIVI) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Harmony Gold Mining Co. (ADR) (NYSE:HMY) is even less popular than AAON. 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.
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