Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process 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 Pretium Resources Inc (NYSE:PVG).
Is PVG a good stock to buy now? Pretium Resources Inc (NYSE:PVG) investors should pay attention to a decrease in support from the world’s most elite money managers of late. Pretium Resources Inc (NYSE:PVG) was in 20 hedge funds’ portfolios at the end of September. The all time high for this statistic is 25. Our calculations also showed that PVG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Roberto Mignone of Bridger Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a peek at the fresh hedge fund action regarding Pretium Resources Inc (NYSE:PVG).
Do Hedge Funds Think PVG Is A Good Stock To Buy Now?
At the end of September, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PVG over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Pretium Resources Inc (NYSE:PVG) was held by Sprott Asset Management, which reported holding $58 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $46.3 million position. Other investors bullish on the company included Paulson & Co, Sun Valley Gold, and Bridger Management. In terms of the portfolio weights assigned to each position Sun Valley Gold allocated the biggest weight to Pretium Resources Inc (NYSE:PVG), around 11.11% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, earmarking 2.37 percent of its 13F equity portfolio to PVG.
Judging by the fact that Pretium Resources Inc (NYSE:PVG) has faced bearish sentiment from hedge fund managers, logic holds that there is a sect of hedgies that decided to sell off their full holdings last quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $3.9 million in stock. Joseph Samuels’s fund, Islet Management, also dumped its stock, about $1.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pretium Resources Inc (NYSE:PVG) but similarly valued. These stocks are Compania Cervecerias Unidas S.A. (NYSE:CCU), Manchester United PLC (NYSE:MANU), Altra Industrial Motion Corp. (NASDAQ:AIMC), Broadstone Net Lease, Inc. (NYSE:BNL), Webster Financial Corporation (NYSE:WBS), Norbord Inc. (NYSE:OSB), and Commercial Metals Company (NYSE:CMC). This group of stocks’ market valuations match PVG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCU | 5 | 20216 | -3 |
| MANU | 15 | 47381 | 4 |
| AIMC | 22 | 118171 | 10 |
| BNL | 12 | 90873 | 12 |
| WBS | 25 | 264192 | -5 |
| OSB | 13 | 76406 | 2 |
| CMC | 20 | 103252 | -2 |
| Average | 16 | 102927 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $212 million in PVG’s case. Webster Financial Corporation (NYSE:WBS) is the most popular stock in this table. On the other hand Compania Cervecerias Unidas S.A. (NYSE:CCU) is the least popular one with only 5 bullish hedge fund positions. Pretium Resources Inc (NYSE:PVG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PVG is 63.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately PVG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PVG were disappointed as the stock returned -15.1% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Penn Virginia Gp Holdings L.p. (NYSE:PVG)
Follow Penn Virginia Gp Holdings L.p. (NYSE:PVG)
Disclosure: None. This article was originally published at Insider Monkey.
