While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Randgold Resources Ltd. (NASDAQ:GOLD) and see how the stock performed in comparison to hedge funds' consensus picks.
Randgold Resources Ltd. (NASDAQ:GOLD) has experienced an increase in enthusiasm from smart money in recent months. GOLD was in 42 hedge funds' portfolios at the end of September. There were 39 hedge funds in our database with GOLD positions at the end of the previous quarter. Our calculations also showed that GOLD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
To the average investor there are numerous signals shareholders have at their disposal to appraise their holdings. Two of the less utilized signals are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best money managers can beat the S&P 500 by a solid margin (see the details here).
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's take a glance at the new hedge fund action surrounding Randgold Resources Ltd. (NASDAQ:GOLD).
Hedge fund activity in Randgold Resources Ltd. (NASDAQ:GOLD)
At Q3's end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GOLD over the last 17 quarters. So, let's review 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 Randgold Resources Ltd. (NASDAQ:GOLD), with a stake worth $260.3 million reported as of the end of September. Trailing Renaissance Technologies was Slate Path Capital, which amassed a stake valued at $169.7 million. Adage Capital Management, Odey Asset Management Group, and Citadel Investment Group 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 Odey Asset Management Group allocated the biggest weight to Randgold Resources Ltd. (NASDAQ:GOLD), around 13.16% of its 13F portfolio. Slate Path Capital is also relatively very bullish on the stock, designating 11.24 percent of its 13F equity portfolio to GOLD.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. International Value Advisers, managed by Charles de Vaulx, established the most valuable position in Randgold Resources Ltd. (NASDAQ:GOLD). International Value Advisers had $43.5 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $14.7 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Benjamin A. Smith's Laurion Capital Management, and Donald Sussman's Paloma Partners.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Randgold Resources Ltd. (NASDAQ:GOLD) but similarly valued. These stocks are Credit Suisse Group AG (NYSE:CS), SunTrust Banks, Inc. (NYSE:STI), O'Reilly Automotive Inc (NASDAQ:ORLY), and Regeneron Pharmaceuticals Inc (NASDAQ:REGN). All of these stocks' market caps resemble GOLD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CS,14,226949,3 STI,31,1100197,0 ORLY,42,2055261,-8 REGN,33,869893,-4 Average,30,1063075,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1063 million. That figure was $1444 million in GOLD's case. O'Reilly Automotive Inc (NASDAQ:ORLY) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 14 bullish hedge fund positions. Randgold Resources Ltd. (NASDAQ:GOLD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on GOLD as the stock returned 65.6% in 2019 (through December 23rd) and outperformed the market. Hedge funds were rewarded for their relative bullishness. 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.