Is Pan American Silver Corp. (PAAS) A Good Stock To Buy?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Pan American Silver Corp. (NASDAQ:PAAS) to find out whether there were any major changes in hedge funds’ views.

Is Pan American Silver Corp. (NASDAQ:PAAS) a buy here? Investors who are in the know were getting less bullish. The number of bullish hedge fund positions retreated by 2 recently. Pan American Silver Corp. (NASDAQ:PAAS) was in 22 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that PAAS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 24 hedge funds in our database with PAAS positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to analyze the new hedge fund action encompassing Pan American Silver Corp. (NASDAQ:PAAS).

Eric Sprott of Sprott Asset Management

Do Hedge Funds Think PAAS Is A Good Stock To Buy Now?

At third quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in PAAS a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, David Greenspan’s Slate Path Capital has the number one position in Pan American Silver Corp. (NASDAQ:PAAS), worth close to $80.2 million, corresponding to 3.7% of its total 13F portfolio. On Slate Path Capital’s heels is Eric Sprott of Sprott Asset Management, with a $72.1 million position; the fund has 4.7% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Pan American Silver Corp. (NASDAQ:PAAS), around 4.74% of its 13F portfolio. Brightlight Capital is also relatively very bullish on the stock, designating 4.34 percent of its 13F equity portfolio to PAAS.

Because Pan American Silver Corp. (NASDAQ:PAAS) has experienced falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedgies who were dropping their positions entirely in the third quarter. It’s worth mentioning that Allan Teh’s Kamunting Street Capital dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $3.6 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Pan American Silver Corp. (NASDAQ:PAAS) but similarly valued. These stocks are PowerSchool Holdings Inc. (NYSE:PWSC), Victorias Secret & Co. (NYSE:VSCO), Wingstop Inc (NASDAQ:WING), Nomad Foods Limited (NYSE:NOMD), Select Medical Holdings Corporation (NYSE:SEM), Amedisys Inc (NASDAQ:AMED), and JetBlue Airways Corporation (NASDAQ:JBLU). This group of stocks’ market caps are similar to PAAS’s market cap.

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As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $799 million. That figure was $252 million in PAAS’s case. Victorias Secret & Co. (NYSE:VSCO) is the most popular stock in this table. On the other hand PowerSchool Holdings Inc. (NYSE:PWSC) is the least popular one with only 11 bullish hedge fund positions. Pan American Silver Corp. (NASDAQ:PAAS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PAAS is 46.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on PAAS as the stock returned 7.7% since the end of the third quarter (through 12/31) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.