Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG) has announced that it has struck another major gold deposit at its 144 exploration area. The latest discovery is based on additional results of 25 drill holes and two wedge holes. This is the second gold discovery made by Lake Shore Gold Corp in less than a year. Back in October, the mining company discovered gold near the 144 Gap area. In a statement, Tony Makuch, President and CEO of Lake Shore Gold, said that the 144 Gap SW Zone, which is the location of the new discovery, is very attractive and accessible. He said that Lake Shore Gold believes that TC-144 Trend has numerous gold deposits, and that the company’s new geophysics research will help it find more golden resources in the near future. LSG gained 2% yesterday and has opened up by another 1% this morning. According to Zacks Investment Research, two of the brokers which cover the stock recently upgraded their rating for the company to ‘Buy’, and just last week, RBC Capital gave it an “Outperform’ rating.
With the future prospects for gold discovery by Lake Shore Gold in the 144 area being high and the company is eyeing the possibility of making Timmins West a gold mining hub, perhaps that’s why the smart money has been bullish on the gold mining company of late. By the end of the first quarter of 2015, nine of the top hedge funds tracked by Insider Monkey held long positions in Lake Shore Gold, up from seven hedge funds which were bullish on the company in the previous quarter. This depicts a 29% increase in the bullishness in the stock.
We at Insider Monkey strongly believe in the importance and value of tracking hedge funds’ positions in companies because hedge funds spend large amounts of resources, time, and money to decide their bets on companies. Our experts analyzed the historical stock picks of small-cap companies made by hedge funds and found out that the funds performed far better betting on these companies than they did on large-cap stocks, which is where most of their money is invested and why their performances as a whole have been poor for a number of years. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012, returning more than 142% and beating the market by more than 83 percentage points since then, and by 4.6 percentage points in the first quarter of this year (see more details here).
Hedge funds’ activity and insider transactions play a major role in the analysis of strengths and weaknesses of a company. Some investors don’t consider hedge funds’ activity as being important because the return rate by hedge funds has not been very impressive lately. However, our research proves that this poor performance doesn’t actually have anything to do with the stock picking ability of hedge funds, but rather with the composition of their investments. Insider activity also helps in getting a deep insight into the company’s stock position. In the case of the latter, Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG) has had no insider activity recorded in 2015.
Let’s have a detailed look at hedge funds’ activity concerning Lake Shore Gold.
Hedge Funds’ Activity Around Lake Shore Gold Corp
The total value of hedge funds’ investment in Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG) as of March 31 was around $12 million. As of the end of 2014, the total value of funds’ investment in the Canadian company was around $7 million. This shows along with an increase in overall ownership, share ownership increased by a wide margin also.
According to the experts at Insider Monkey, Eric Sprott‘s Sprott Asset Management has the largest stake in Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG), worth close to $6.4 million, comprising 0.5% of its total 13F portfolio. Andrew Weiss of Weiss Asset Management has the second-largest stake in the Canadian mining company, with a $1.8 million position, with 1.5% of his 13F portfolio being allocated to the stock. David E. Shaw‘s D E Shaw, Jim Simons‘ Renaissance Technologies, and John Thiessen’s Vertex One Asset Management are some of the other notable hedge funds having stakes in Lake Shore Gold.
With positive hedge fund sentiment and strong prospects for growth, we recommend a ‘Buy’ rating for Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEMKT:LSG).
Disclosure: None
