Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool for an individual investor’s stock selection process, as it may offer great insights of how the brightest minds in the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG)? The smart money sentiment can provide an answer to this question.
Hedge fund interest in Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare LSG to other stocks including Daktronics, Inc. (NASDAQ:DAKT), CU Bancorp (NASDAQ:CUNB), and The First of Long Island Corporation (NASDAQ:FLIC) to get a better sense of its popularity.
To most traders, hedge funds are perceived as unimportant, old financial tools of the past. While there are over 8000 funds in operation at present, Our experts look at the leaders of this club, approximately 700 funds. These money managers preside over most of the smart money’s total capital, and by shadowing their inimitable investments, Insider Monkey has spotted many investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Now, let’s take a glance at the new action surrounding Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG).
What have hedge funds been doing with Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exist a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Sprott Asset Management, managed by Eric Sprott, holds the largest position in Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG). Sprott Asset Management has a $9.1 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, holding a $1.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of D. E. Shaw’s D E Shaw, John Thiessen’s Vertex One Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors.
We view hedge fund activity in the stock unfavorable, but, in this case, there was only a single hedge fund selling its entire position: LMR Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Two Sigma Advisors).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG) but similarly valued. We will take a look at Daktronics, Inc. (NASDAQ:DAKT), CU Bancorp (NASDAQ:CUNB), The First of Long Island Corporation (NASDAQ:FLIC), and Mechel OAO (ADR) (NYSE:MTL). This group of stocks’ market caps match LSG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DAKT | 10 | 13019 | -3 |
| CUNB | 7 | 36379 | 2 |
| FLIC | 6 | 50033 | 0 |
| MTL | 6 | 430 | 1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $14 million in LSG’s case. Daktronics, Inc. (NASDAQ:DAKT) is the most popular stock in this table. On the other hand The First of Long Island Corporation (NASDAQ:FLIC) is the least popular one with only 6 bullish hedge fund positions. Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG) is not the least popular stock in this group, but hedge fund interest is still not impressive. This is a slightly negative signal, and we’d rather spend our time researching stocks that hedge funds are collectively most fond of, such as DAKT in this particular case.
