Should You Buy Pan American Silver Corp. (USA) (PAAS)?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Pan American Silver Corp. (USA) (NASDAQ:PAAS) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 17 hedge funds in our database with PAAS holdings at the end of the previous quarter. At the end of this article we will also compare PAAS to other stocks including Corporate Office Properties Trust (NYSE:OFC), Stantec Inc. (USA) (NYSE:STN), and Louisiana-Pacific Corporation (NYSE:LPX) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, we’re going to view the recent action surrounding Pan American Silver Corp. (USA) (NASDAQ:PAAS).

Hedge fund activity in Pan American Silver Corp. (USA) (NASDAQ:PAAS)

Heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PAAS over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Jim Simons’s Renaissance Technologies has the largest position in Pan American Silver Corp. (USA) (NASDAQ:PAAS), worth close to $76.2 million, corresponding to 0.1% of its total 13F portfolio. The second largest stake is held by D E Shaw, another quant hedge fund, holding a $21.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Griffin’s Citadel Investment Group and Paul Marshall and Ian Wace’s Marshall Wace LLP. We should note that none of these hedge funds are 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.

As industrywide interest jumped, some big names were leading the bulls’ herd. Prince Street Capital Management, led by David Halpert, created the most valuable position in Pan American Silver Corp. (USA) (NASDAQ:PAAS). Prince Street Capital Management had $10.2 million invested in the company at the end of the quarter. George Hall’s Clinton Group also initiated a $4.7 million position during the quarter. The other funds with brand new PAAS positions are Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management, and Ari Zweiman’s 683 Capital Partners.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pan American Silver Corp. (USA) (NASDAQ:PAAS) but similarly valued. We will take a look at Corporate Office Properties Trust (NYSE:OFC), Stantec Inc. (USA) (NYSE:STN), Louisiana-Pacific Corporation (NYSE:LPX), and CNO Financial Group Inc (NYSE:CNO). This group of stocks’ market valuations are similar to PAAS’s market valuation.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $200 million. That figure was $196 million in PAAS’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Stantec Inc. (USA) (NYSE:STN) is the least popular one with only 6 bullish hedge fund positions. Pan American Silver Corp. (USA) (NASDAQ:PAAS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LPX might be a better candidate to consider taking a long position in.