How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Alamos Gold Inc (NYSE:AGI).
Alamos Gold Inc (NYSE:AGI) was in 13 hedge funds’ portfolios at the end of September. AGI investors should pay attention to an increase in hedge fund interest of late. There were 10 hedge funds in our database with AGI positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Trueblue Inc (NYSE:TBI), Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), and Dynavax Technologies Corporation (NASDAQ:DVAX) to gather more data points.
With all of this in mind, we’re going to take a look at the recent action encompassing Alamos Gold Inc (NYSE:AGI).
What have hedge funds been doing with Alamos Gold Inc (NYSE:AGI)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Peter Franklin Palmedo’s Sun Valley Gold has the biggest position in Alamos Gold Inc (NYSE:AGI), worth close to $28.3 million, comprising 1.7% of its total 13F portfolio. Sitting at the No. 2 spot is Anchor Bolt Capital, led by Robert Polak, holding a $7.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Jim Simons’ Renaissance Technologies and Eric Sprott’s Sprott Asset Management.
Consequently, specific money managers have jumped into Alamos Gold Inc (NYSE:AGI) headfirst. Anchor Bolt Capital, managed by Robert Polak, initiated the biggest position in Alamos Gold Inc (NYSE:AGI). Anchor Bolt Capital had $7.1 million invested in the company at the end of the quarter. Jacob Gottlieb’s Visium Asset Management also initiated a $2.4 million position during the quarter. The following funds were also among the new AGI investors: Mark Travis’s Intrepid Capital Management, David Costen Haley’s HBK Investments, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Alamos Gold Inc (NYSE:AGI) but similarly valued. We will take a look at Trueblue Inc (NYSE:TBI), Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), Dynavax Technologies Corporation (NASDAQ:DVAX), and Infoblox Inc (NYSE:BLOX). This group of stocks’ market caps match AGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TBI | 14 | 53106 | 0 |
| ACHN | 24 | 269553 | -1 |
| DVAX | 32 | 348181 | 5 |
| BLOX | 24 | 207164 | -5 |
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $55 million in AGI’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand Trueblue Inc (NYSE:TBI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Alamos Gold Inc (NYSE:AGI) is even less popular than TBI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
