Where Do Hedge Funds Stand On ASA Gold and Precious Metals Ltd (ASA)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of ASA Gold and Precious Metals Ltd (NYSE:ASA).

ASA Gold and Precious Metals Ltd (NYSE:ASA) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that ASA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). 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 U.S. Xpress Enterprises, Inc. (NYSE:USX), ProPetro Holding Corp. (NYSE:PUMP), and Beazer Homes USA, Inc. (NYSE:BZH) to gather more data points.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Rudolph Kluiber of GRT Capital Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to take a gander at the recent hedge fund action surrounding ASA Gold and Precious Metals Ltd (NYSE:ASA).

Hedge fund activity in ASA Gold and Precious Metals Ltd (NYSE:ASA)

At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in ASA a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

The largest stake in ASA Gold and Precious Metals Ltd (NYSE:ASA) was held by Royce & Associates, which reported holding $7.9 million worth of stock at the end of September. It was followed by Water Street Capital with a $4.8 million position. Other investors bullish on the company included Bulldog Investors, GRT Capital Partners, and Ancora Advisors. In terms of the portfolio weights assigned to each position Bulldog Investors allocated the biggest weight to ASA Gold and Precious Metals Ltd (NYSE:ASA), around 0.56% of its 13F portfolio. Water Street Capital is also relatively very bullish on the stock, dishing out 0.52 percent of its 13F equity portfolio to ASA.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks similar to ASA Gold and Precious Metals Ltd (NYSE:ASA). These stocks are U.S. Xpress Enterprises, Inc. (NYSE:USX), ProPetro Holding Corp. (NYSE:PUMP), Beazer Homes USA, Inc. (NYSE:BZH), Dorian LPG Ltd (NYSE:LPG), International Seaways, Inc. (NYSE:INSW), China Online Education Group (NYSE:COE), and CBTX, Inc. (NASDAQ:CBTX). This group of stocks’ market caps match ASA’s market cap.

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As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $15 million in ASA’s case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand China Online Education Group (NYSE:COE) is the least popular one with only 4 bullish hedge fund positions. ASA Gold and Precious Metals Ltd (NYSE:ASA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ASA is 38.8. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately ASA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ASA investors were disappointed as the stock returned -8.8% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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