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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded McEwen Mining Inc (NYSE:MUX) based on those filings.
Is McEwen Mining Inc (NYSE:MUX) a buy right now? Prominent investors are getting less bullish. The number of bullish hedge fund positions were cut by 4 in recent months. Our calculations also showed that MUX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). MUX was in 8 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with MUX holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the key hedge fund action regarding McEwen Mining Inc (NYSE:MUX).
What have hedge funds been doing with McEwen Mining Inc (NYSE:MUX)?
Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MUX over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Sun Valley Gold was the largest shareholder of McEwen Mining Inc (NYSE:MUX), with a stake worth $1.6 million reported as of the end of September. Trailing Sun Valley Gold was Renaissance Technologies, which amassed a stake valued at $1.2 million. Winton Capital Management, Sprott Asset Management, and Millennium 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 Sun Valley Gold allocated the biggest weight to McEwen Mining Inc (NYSE:MUX), around 0.13% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to MUX.
Judging by the fact that McEwen Mining Inc (NYSE:MUX) has faced declining sentiment from hedge fund managers, we can see that there is a sect of money managers that slashed their positions entirely in the first quarter. It’s worth mentioning that Michael Platt and William Reeves’s BlueCrest Capital Mgmt. cut the largest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $0.9 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $0.4 million worth. These transactions are important to note, as total hedge fund interest fell by 4 funds in the first quarter.
Let’s go over hedge fund activity in other stocks similar to McEwen Mining Inc (NYSE:MUX). These stocks are Sterling Construction Company, Inc. (NASDAQ:STRL), Mersana Therapeutics, Inc. (NASDAQ:MRSN), Aurora Mobile Limited (NASDAQ:JG), and IMARA Inc. (NASDAQ:IMRA). All of these stocks’ market caps match MUX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STRL | 14 | 34308 | -1 |
| MRSN | 17 | 82654 | 2 |
| JG | 1 | 114 | -1 |
| IMRA | 8 | 87057 | 8 |
| Average | 10 | 51033 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $4 million in MUX’s case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand Aurora Mobile Limited (NASDAQ:JG) is the least popular one with only 1 bullish hedge fund positions. McEwen Mining Inc (NYSE:MUX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on MUX as the stock returned 38.4% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
