Before we spend countless hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Nexa Resources S.A. (NYSE:NEXA).
Nexa Resources S.A. (NYSE:NEXA) was in 10 hedge funds’ portfolios at the end of the fourth quarter of 2018. NEXA shareholders have witnessed an increase in support from the world’s most elite money managers lately. There were 9 hedge funds in our database with NEXA positions at the end of the previous quarter. Our calculations also showed that NEXA isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s check out the key hedge fund action surrounding Nexa Resources S.A. (NYSE:NEXA).
How have hedgies been trading Nexa Resources S.A. (NYSE:NEXA)?
Heading into the first quarter of 2019, a total of 10 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 NEXA over the last 14 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, GLG Partners was the largest shareholder of Nexa Resources S.A. (NYSE:NEXA), with a stake worth $6.8 million reported as of the end of December. Trailing GLG Partners was Citadel Investment Group, which amassed a stake valued at $2.9 million. Arrowstreet Capital, Renaissance Technologies, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, some big names were breaking ground themselves. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, created the most outsized position in Nexa Resources S.A. (NYSE:NEXA). Springbok Capital had $0.1 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Nexa Resources S.A. (NYSE:NEXA) but similarly valued. These stocks are Axos Financial, Inc. (NYSE:AX), Acushnet Holdings Corp. (NYSE:GOLF), Workiva Inc (NYSE:WK), and Moelis & Company (NYSE:MC). All of these stocks’ market caps are similar to NEXA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AX | 15 | 65080 | 4 |
| GOLF | 11 | 21058 | -3 |
| WK | 16 | 147554 | 1 |
| MC | 21 | 72307 | 1 |
| Average | 15.75 | 76500 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $19 million in NEXA’s case. Moelis & Company (NYSE:MC) is the most popular stock in this table. On the other hand Acushnet Holdings Corp. (NYSE:GOLF) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Nexa Resources S.A. (NYSE:NEXA) is even less popular than GOLF. Hedge funds dodged a bullet by taking a bearish stance towards NEXA. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NEXA wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); NEXA investors were disappointed as the stock returned 9.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
