This Metric Says You Are Smart to Buy Compania de Minas Buenaventura SA (ADR) (BVN)

Compania de Minas Buenaventura SA (ADR) (NYSE:BVN) was in 10 hedge funds’ portfolio at the end of the first quarter of 2013. BVN has experienced an increase in hedge fund sentiment lately. There were 7 hedge funds in our database with BVN positions at the end of the previous quarter.

To most market participants, hedge funds are perceived as unimportant, outdated investment tools of the past. While there are more than 8000 funds with their doors open at present, we look at the leaders of this group, around 450 funds. Most estimates calculate that this group controls most of the smart money’s total asset base, and by monitoring their best picks, we have discovered a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as integral, optimistic insider trading activity is another way to break down the stock market universe. Just as you’d expect, there are plenty of motivations for an insider to downsize shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if investors know what to do (learn more here).

With these “truths” under our belt, we’re going to take a gander at the recent action encompassing Compania de Minas Buenaventura SA (ADR) (NYSE:BVN).

What does the smart money think about Compania de Minas Buenaventura SA (ADR) (NYSE:BVN)?

At Q1’s end, a total of 10 of the hedge funds we track held long positions in this stock, a change of 43% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Jim Simons’s Renaissance Technologies had the largest position in Compania de Minas Buenaventura SA (ADR) (NYSE:BVN), worth close to $7.7 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Howard Marks of Oaktree Capital Management, with a $5.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Jane Mendillo’s Harvard Management Co, Cliff Asness’s AQR Capital Management and Rob Citrone’s Discovery Capital Management.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the biggest position in Compania de Minas Buenaventura SA (ADR) (NYSE:BVN). PEAK6 Capital Management had 0.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.4 million investment in the stock during the quarter. The other funds with brand new BVN positions are Steven Cohen’s SAC Capital Advisors, Mike Vranos’s Ellington, and David Costen Haley’s HBK Investments.

How are insiders trading Compania de Minas Buenaventura SA (ADR) (NYSE:BVN)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past six months. Over the last 180-day time frame, Compania de Minas Buenaventura SA (ADR) (NYSE:BVN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Compania de Minas Buenaventura SA (ADR) (NYSE:BVN). These stocks are Gold Fields Limited (ADR) (NYSE:GFI), Franco-Nevada Corporation (NYSE:FNV), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Eldorado Gold Corp (USA) (NYSE:EGO), and Agnico-Eagle Mines Limited (USA) (NYSE:AEM). All of these stocks are in the gold industry and their market caps are similar to BVN’s market cap.

With the returns demonstrated by the aforementioned studies, everyday investors should always monitor hedge fund and insider trading activity, and Compania de Minas Buenaventura SA (ADR) (NYSE:BVN) is no exception.

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