Was The Smart Money Right About Newmont Corporation (NEM)?

In this article we will take a look at whether hedge funds think Newmont Corporation (NYSE:NEM) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Newmont Corporation (NYSE:NEM) has seen a decrease in support from the world’s most elite money managers lately. Newmont Corporation (NYSE:NEM) was in 50 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 55. Our calculations also showed that NEM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Blair Levinsky of Waratah Capital Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to check out the fresh hedge fund action encompassing Newmont Corporation (NYSE:NEM).

Do Hedge Funds Think NEM Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NEM over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Newmont Corporation (NYSE:NEM) was held by Renaissance Technologies, which reported holding $287.8 million worth of stock at the end of December. It was followed by AQR Capital Management with a $253.2 million position. Other investors bullish on the company included International Value Advisers, D E Shaw, and Driehaus Capital. In terms of the portfolio weights assigned to each position International Value Advisers allocated the biggest weight to Newmont Corporation (NYSE:NEM), around 16.47% of its 13F portfolio. Heathbridge Capital Management is also relatively very bullish on the stock, dishing out 9.38 percent of its 13F equity portfolio to NEM.

Since Newmont Corporation (NYSE:NEM) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds who sold off their full holdings by the end of the fourth quarter. It’s worth mentioning that Rajiv Jain’s GQG Partners dumped the biggest stake of the 750 funds followed by Insider Monkey, comprising about $331.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $42.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 5 funds by the end of the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Newmont Corporation (NYSE:NEM). We will take a look at Eaton Corporation plc (NYSE:ETN), Relx PLC (NYSE:RELX), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Canadian Pacific Railway Limited (NYSE:CP), Kimberly Clark Corporation (NYSE:KMB), Las Vegas Sands Corp. (NYSE:LVS), and Lululemon Athletica inc. (NASDAQ:LULU). This group of stocks’ market values resemble NEM’s market value.

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As you can see these stocks had an average of 45 hedge funds with bullish positions and the average amount invested in these stocks was $2167 million. That figure was $1213 million in NEM’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 8 bullish hedge fund positions. Newmont Corporation (NYSE:NEM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NEM is 52.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately NEM wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NEM were disappointed as the stock returned 5.2% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.