The market has been volatile in the last few months as the Federal Reserve continued its rate cuts and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points over the last 12 months. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q2 and the beginning of Q3. In this article, we analyze what the smart money thinks of IAMGOLD Corporation (NYSE:IAG) and find out how it is affected by hedge funds’ moves.
IAMGOLD Corporation (NYSE:IAG) has seen an increase in hedge fund interest lately. IAG was in 15 hedge funds’ portfolios at the end of June. There were 13 hedge funds in our database with IAG holdings at the end of the previous quarter. Our calculations also showed that IAG isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are seen as slow, old investment vehicles of yesteryear. While there are more than 8000 funds trading at the moment, We choose to focus on the crème de la crème of this club, about 750 funds. Most estimates calculate that this group of people control the lion’s share of all hedge funds’ total capital, and by tracking their top picks, Insider Monkey has figured out a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to analyze the fresh hedge fund action surrounding IAMGOLD Corporation (NYSE:IAG).
What does smart money think about IAMGOLD Corporation (NYSE:IAG)?
At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards IAG over the last 16 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in IAMGOLD Corporation (NYSE:IAG) was held by Renaissance Technologies, which reported holding $75.2 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $17.9 million position. Other investors bullish on the company included Sun Valley Gold, Millennium Management, and Two Sigma Advisors.
As industrywide interest jumped, specific money managers have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, created the biggest position in IAMGOLD Corporation (NYSE:IAG). Moore Global Investments had $6.9 million invested in the company at the end of the quarter. Frederick DiSanto’s Ancora Advisors also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new IAG investors: Matthew Hulsizer’s PEAK6 Capital Management, Ray Dalio’s Bridgewater Associates, and John A. Levin’s Levin Capital Strategies.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as IAMGOLD Corporation (NYSE:IAG) but similarly valued. These stocks are Cambrex Corporation (NYSE:CBM), PriceSmart, Inc. (NASDAQ:PSMT), Instructure, Inc. (NYSE:INST), and Scorpio Tankers Inc. (NYSE:STNG). All of these stocks’ market caps resemble IAG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBM | 12 | 30487 | -1 |
| PSMT | 15 | 60518 | 5 |
| INST | 21 | 491235 | -3 |
| STNG | 23 | 163011 | 5 |
| Average | 17.75 | 186313 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $150 million in IAG’s case. Scorpio Tankers Inc. (NYSE:STNG) is the most popular stock in this table. On the other hand Cambrex Corporation (NYSE:CBM) is the least popular one with only 12 bullish hedge fund positions. IAMGOLD Corporation (NYSE:IAG) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately IAG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IAG investors were disappointed as the stock returned 0.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
