At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Seabridge Gold, Inc. (USA) (NYSE:SA) has experienced a decrease in support from the world’s most successful money managers of late. There were 8 hedge funds in our database with SA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), Novanta Inc (USA) (NASDAQ:NOVT), and Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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How are hedge funds trading Seabridge Gold, Inc. (USA) (NYSE:SA)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in SA at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Eric Sprott’s Sprott Asset Management has the biggest position in Seabridge Gold, Inc. (USA) (NYSE:SA), worth close to $3.5 million, comprising 0.1% of its total 13F portfolio. On Sprott Asset Management’s heels is Weiss Asset Management, led by Andrew Weiss, holding a $3.3 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism contain Chuck Royce’s Royce & Associates, and Matthew Hulsizer’s PEAK6 Capital Management. We should note that Sprott Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because Seabridge Gold, Inc. (USA) (NYSE:SA) has experienced bearish sentiment from the smart money, it’s safe to say that there is a sect of fund managers that elected to cut their positions entirely in the third quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cashed in the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth an estimated $4.2 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund cut about $2.4 million worth of shares.
Let’s also examine hedge fund activity in other stocks similar to Seabridge Gold, Inc. (USA) (NYSE:SA). These stocks are 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), Novanta Inc (USA) (NASDAQ:NOVT), Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), and Mechel PAO (ADR) (NYSE:MTL). This group of stocks’ market valuations match SA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLWS | 14 | 33694 | 1 |
| NOVT | 13 | 65748 | 3 |
| ASPS | 17 | 102297 | 3 |
| MTL | 3 | 1299 | 0 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $12 million in SA’s case. Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) is the most popular stock in this table. On the other hand Mechel PAO (ADR) (NYSE:MTL) is the least popular one with only 3 bullish hedge fund positions. Seabridge Gold, Inc. (USA) (NYSE:SA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ASPS might be a better candidate to consider taking a long position in.
