Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Alamos Gold Inc (USA) (NYSE:AGI) shareholders have witnessed a decrease in support from the world’s most successful money managers recently. AGI was in 12 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with AGI positions at the end of the previous quarter. 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 Barnes Group Inc. (NYSE:B), Puma Biotechnology Inc (NYSE:PBYI), and Mine Safety Appliances (NYSE:MSA) to gather more data points.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What have hedge funds been doing with Alamos Gold Inc (USA) (NYSE:AGI)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 25% decline from the second quarter of 2016, as hedge fund ownership sinks to a yearly low. The graph below displays the number of hedge funds with bullish positions in AGI over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Sun Valley Gold, led by Peter Franklin Palmedo, holds the most valuable position in Alamos Gold Inc (USA) (NYSE:AGI). Sun Valley Gold has a $40.4 million position in the stock, comprising 1.3% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $31.3 million position. Other hedge funds and institutional investors with similar optimism encompass Millennium Management, one of the 10 largest hedge funds in the world, Eric Sprott’s Sprott Asset Management, and David E. Shaw’s D E Shaw. We should note that two of these hedge funds (Sun Valley Gold and Sprott Asset Management) 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.
Since Alamos Gold Inc (USA) (NYSE:AGI) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that slashed their entire stakes last quarter. Interestingly, Jacob Gottlieb’s Visium Asset Management dumped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $4 million in stock. Brian Ashford-Russell and Tim Woolley’s fund, Polar Capital, also dumped its stock, about $2.7 million worth.
Let’s now review hedge fund activity in other stocks similar to Alamos Gold Inc (USA) (NYSE:AGI). These stocks are Barnes Group Inc. (NYSE:B), Puma Biotechnology Inc (NYSE:PBYI), Mine Safety Appliances (NYSE:MSA), and Allegiant Travel Company (NASDAQ:ALGT). This group of stocks’ market values are similar to AGI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| B | 17 | 33534 | 1 |
| PBYI | 24 | 793828 | 9 |
| MSA | 10 | 18371 | 1 |
| ALGT | 21 | 225333 | 3 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $268 million. That figure was $120 million in AGI’s case. Puma Biotechnology Inc (NYSE:PBYI) is the most popular stock in this table. On the other hand Mine Safety Appliances (NYSE:MSA) is the least popular one with only 10 bullish hedge fund positions. Alamos Gold Inc (USA) (NYSE:AGI) 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. In this regard PBYI might be a better candidate to consider taking a long position in.
Disclosure: None
