Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Sandstorm Gold Ltd. (NYSEMKT:SAND) from the perspective of those elite funds.
Is Sandstorm Gold Ltd. (NYSEMKT:SAND) a buy, sell, or hold? Hedge funds are becoming more confident. The number of bullish hedge fund bets rose by 1 lately. On the contrary, the market was bearish over the stock of Sandstorm Gold Ltd. (NYSEMKT:SAND), which lost 9.18% during the last quarter. Such a behavior prompted us to find out more about the hedge fund sentiment by covering the hedgies holding positions in Sandstorm Gold Ltd. (NYSEMKT:SAND), at the end of the last 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 Landec Corporation (NASDAQ:LNDC), Stage Stores Inc (NYSE:SSI), and Ardmore Shipping Corp (NYSE:ASC) to gather more data points.
To most stock holders, hedge funds are perceived as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at present, our experts hone in on the top tier of this group, approximately 700 funds. These investment experts orchestrate the majority of all hedge funds’ total capital, and by following their inimitable stock picks, Insider Monkey has spotted various investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s go over the latest action regarding Sandstorm Gold Ltd. (NYSEMKT:SAND).
What does the smart money think about Sandstorm Gold Ltd. (NYSEMKT:SAND)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 14% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Intrepid Capital Management, managed by Mark Travis, holds the most valuable position in Sandstorm Gold Ltd. (NYSEMKT:SAND). Intrepid Capital Management has a $7.1 million position in the stock, comprising 2.5% of its 13F portfolio. The second most bullish fund manager is Murray Stahl of Horizon Asset Management, with a $5.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Renaissance Technologies, Jim Roumell’s Roumell Asset Management, and Israel Englander’s Millennium Management.
As one would reasonably expect, specific money managers have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the most outsized position in Sandstorm Gold Ltd. (NYSEMKT:SAND). PEAK6 Capital Management had $0 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks similar to Sandstorm Gold Ltd. (NYSE:SAND). We will take a look at Landec Corporation (NASDAQ:LNDC), Stage Stores Inc (NYSE:SSI), Ardmore Shipping Corp (NYSE:ASC), and Halcon Resources Corp (NYSE:HK). This group of stocks’ market valuations are similar to SAND’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LNDC | 13 | 65926 | 5 |
| SSI | 12 | 8821 | -2 |
| ASC | 10 | 29163 | -4 |
| HK | 6 | 1414 | -1 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $24 million in SAND’s case. Landec Corporation (NASDAQ:LNDC) is the most popular stock in this table. On the other hand Halcon Resources Corp (NYSE:HK) is the least popular one with only 6 bullish hedge fund positions. Sandstorm Gold Ltd. (NYSE:SAND) 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 LNDC might be a better candidate to consider a long position.
