We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Kinross Gold Corporation (NYSE:KGC) based on those filings.
Kinross Gold Corporation (NYSE:KGC) investors should pay attention to a decrease in hedge fund interest in recent months. KGC was in 25 hedge funds’ portfolios at the end of December. There were 28 hedge funds in our database with KGC holdings at the end of the previous quarter. Our calculations also showed that KGC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
According to most stock holders, hedge funds are viewed as unimportant, outdated investment tools of the past. While there are more than 8000 funds with their doors open today, Our researchers look at the masters of this group, about 850 funds. These investment experts oversee bulk of the hedge fund industry’s total capital, and by keeping an eye on their top investments, Insider Monkey has determined various investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action regarding Kinross Gold Corporation (NYSE:KGC).
What does smart money think about Kinross Gold Corporation (NYSE:KGC)?
Heading into the first quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KGC over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Kinross Gold Corporation (NYSE:KGC), with a stake worth $291.3 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $27.5 million. Arrowstreet Capital, Millennium Management, and Contrarius Investment Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to Kinross Gold Corporation (NYSE:KGC), around 1.96% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 1.94 percent of its 13F equity portfolio to KGC.
Judging by the fact that Kinross Gold Corporation (NYSE:KGC) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $0.8 million in stock. Mark Broach’s fund, Manatuck Hill Partners, also cut its stock, about $0.5 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Kinross Gold Corporation (NYSE:KGC) but similarly valued. These stocks are The Scotts Miracle-Gro Company (NYSE:SMG), BWX Technologies Inc (NYSE:BWXT), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), and First Solar, Inc. (NASDAQ:FSLR). All of these stocks’ market caps are similar to KGC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMG | 31 | 365213 | -3 |
| BWXT | 22 | 81924 | -3 |
| LECO | 16 | 245514 | -2 |
| FSLR | 24 | 140318 | -8 |
| Average | 23.25 | 208242 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $208 million. That figure was $449 million in KGC’s case. The Scotts Miracle-Gro Company (NYSE:SMG) is the most popular stock in this table. On the other hand Lincoln Electric Holdings, Inc. (NASDAQ:LECO) is the least popular one with only 16 bullish hedge fund positions. Kinross Gold Corporation (NYSE:KGC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on KGC as the stock returned -1.7% during the first quarter (through March 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
