Should You Avoid Vista Gold Corp. (VGZ)?

Vista Gold Corp. (NYSEAMEX:VGZ) was in 8 hedge funds’ portfolio at the end of December. VGZ has experienced a decrease in hedge fund interest of late. There were 9 hedge funds in our database with VGZ positions at the end of the previous quarter.

To the average investor, there are many methods shareholders can use to monitor stocks. Two of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outclass the market by a very impressive margin (see just how much).

Equally as beneficial, bullish insider trading activity is another way to break down the financial markets. There are lots of incentives for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this strategy if you understand where to look (learn more here).

Now, let’s take a gander at the key action regarding Vista Gold Corp. (NYSEAMEX:VGZ).

What have hedge funds been doing with Vista Gold Corp. (NYSEAMEX:VGZ)?

Heading into 2013, a total of 8 of the hedge funds we track were long in this stock, a change of -11% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Sun Valley Gold, managed by Peter Franklin Palmedo, holds the largest position in Vista Gold Corp. (NYSEAMEX:VGZ). Sun Valley Gold has a $32.6 million position in the stock, comprising 1.7% of its 13F portfolio. Coming in second is Eric Sprott of Sprott Asset Management, with a $17.8 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Gregory Fraser, Rudolph Kluiber, and Timothy Kroch’s GRT Capital Partners.

Judging by the fact that Vista Gold Corp. (NYSEAMEX:VGZ) has experienced falling interest from the smart money, logic holds that there lies a certain “tier” of money managers who were dropping their full holdings heading into 2013. Interestingly, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners said goodbye to the largest stake of all the hedgies we track, valued at about $0.1 million in stock., and Ken Griffin of Citadel Investment Group was right behind this move, as the fund dumped about $0 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds heading into 2013.

What have insiders been doing with Vista Gold Corp. (NYSEAMEX:VGZ)?

Insider buying is most useful when the company in question has seen transactions within the past half-year. Over the latest 180-day time frame, Vista Gold Corp. (NYSEAMEX:VGZ) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Vista Gold Corp. (NYSEAMEX:VGZ). These stocks are Comstock Mining, Inc. (NYSEAMEX:LODE), Lake Shore Gold Corp Ordinary Shares (Canada) (NYSEAMEX:LSG), International Tower Hill Mines Ltd(USA] (NYSEAMEX:THM), Midway Gold Corp (USA) (NYSEAMEX:MDW), and Brigus Gold Corp (USA) (NYSEAMEX:BRD). This group of stocks belong to the gold industry and their market caps are closest to VGZ’s market cap.

With the returns exhibited by our studies, everyday investors should always monitor hedge fund and insider trading sentiment, and Vista Gold Corp. (NYSEAMEX:VGZ) shareholders fit into this picture quite nicely.

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