We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Newmont Corporation (NYSE:NEM) is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Newmont Corporation (NYSE:NEM) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2019. NEM shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 44 hedge funds in our database with NEM positions at the end of the previous quarter. Our calculations also showed that NEM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the fresh hedge fund action encompassing Newmont Corporation (NYSE:NEM).
How have hedgies been trading Newmont Corporation (NYSE:NEM)?
Heading into the first quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in NEM over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Newmont Corporation (NYSE:NEM), with a stake worth $401.2 million reported as of the end of September. Trailing Renaissance Technologies was International Value Advisers, which amassed a stake valued at $86.8 million. AQR Capital Management, Millennium Management, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Newmont Corporation (NYSE:NEM), around 7.21% of its 13F portfolio. Anchor Bolt Capital is also relatively very bullish on the stock, earmarking 3.68 percent of its 13F equity portfolio to NEM.
Due to the fact that Newmont Corporation (NYSE:NEM) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers that elected to cut their entire stakes in the third quarter. It’s worth mentioning that Joe Milano’s Greenhouse Funds said goodbye to the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling about $11.3 million in stock. Steve Cohen’s fund, Point72 Asset Management, also sold off its stock, about $6.8 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 10 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Newmont Corporation (NYSE:NEM) but similarly valued. These stocks are NXP Semiconductors NV (NASDAQ:NXPI), Travelers Companies Inc (NYSE:TRV), Canadian Pacific Railway Limited (NYSE:CP), and Carnival Corporation & Plc (NYSE:CCL). All of these stocks’ market caps are similar to NEM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NXPI | 80 | 3769335 | 18 |
| TRV | 39 | 906120 | 1 |
| CP | 29 | 1760164 | -4 |
| CCL | 34 | 895329 | 4 |
| Average | 45.5 | 1832737 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.5 hedge funds with bullish positions and the average amount invested in these stocks was $1833 million. That figure was $990 million in NEM’s case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Canadian Pacific Railway Limited (NYSE:CP) is the least popular one with only 29 bullish hedge fund positions. Newmont Corporation (NYSE:NEM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but still beat the market by 12.9 percentage points. A small number of hedge funds were also right about betting on NEM as the stock returned 40.8% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
