Is ASA Gold and Precious Metals Limited (ASA) Going to Burn These Hedge Funds?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider ASA Gold and Precious Metals Limited (NYSE:ASA) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Hedge fund interest in ASA Gold and Precious Metals Limited (NYSE:ASA) shares was flat at the end of last quarter. This is usually a negative indicator. 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 BRT Apartments Corp. (NYSE:BRT), Workhorse Group, Inc. (NASDAQ:WKHS), and Xenon Pharmaceuticals Inc (NASDAQ:XENE) to gather more data points. 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 below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="aligncenter" width="450"]
Chuck Royce of Royce & Associates[/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 we're going to take a glance at the key hedge fund action surrounding ASA Gold and Precious Metals Limited (NYSE:ASA).
What have hedge funds been doing with ASA Gold and Precious Metals Limited (NYSE:ASA)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ASA over the last 17 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.
The largest stake in ASA Gold and Precious Metals Limited (NYSE:ASA) was held by Water Street Capital, which reported holding $6 million worth of stock at the end of September. It was followed by Royce & Associates with a $5.1 million position. The only other hedge fund that is bullish on the company was Ionic Capital Management.
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 review hedge fund activity in other stocks - not necessarily in the same industry as ASA Gold and Precious Metals Limited (NYSE:ASA) but similarly valued. These stocks are BRT Apartments Corp. (NYSE:BRT), Workhorse Group, Inc. (NASDAQ:WKHS), Xenon Pharmaceuticals Inc (NASDAQ:XENE), and VolitionRX Limited (NYSE:VNRX). This group of stocks' market caps match ASA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRT,5,11630,1 WKHS,5,7670,2 XENE,16,101425,-1 VNRX,1,378,0 Average,6.75,30276,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $15 million in ASA's case. Xenon Pharmaceuticals Inc (NASDAQ:XENE) is the most popular stock in this table. On the other hand VolitionRX Limited (NYSE:VNRX) is the least popular one with only 1 bullish hedge fund positions. ASA Gold and Precious Metals Limited (NYSE:ASA) is not the least popular stock in this group but hedge fund interest is still below average. 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 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 1.6% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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