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After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards AngloGold Ashanti Limited (NYSE:AU).
Is AU a good stock to buy now? AngloGold Ashanti Limited (NYSE:AU) investors should be aware of an increase in support from the world's most elite money managers lately. AngloGold Ashanti Limited (NYSE:AU) was in 17 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 27. There were 16 hedge funds in our database with AU positions at the end of the second quarter. Our calculations also showed that AU 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).
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Donald Sussman of Paloma 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. Now we're going to take a look at the recent hedge fund action surrounding AngloGold Ashanti Limited (NYSE:AU).
Do Hedge Funds Think AU Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AU over the last 21 quarters. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Paulson & Co held the most valuable stake in AngloGold Ashanti Limited (NYSE:AU), which was worth $184 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $111.3 million worth of shares. Arrowstreet Capital, Oaktree Capital Management, and Renaissance Technologies 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 Paulson & Co allocated the biggest weight to AngloGold Ashanti Limited (NYSE:AU), around 5.73% of its 13F portfolio. Oaktree Capital Management is also relatively very bullish on the stock, earmarking 1.65 percent of its 13F equity portfolio to AU.
As industrywide interest jumped, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in AngloGold Ashanti Limited (NYSE:AU). Marshall Wace LLP had $1 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $0.9 million position during the quarter. The following funds were also among the new AU investors: Donald Sussman's Paloma Partners and Lee Ainslie's Maverick Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as AngloGold Ashanti Limited (NYSE:AU) but similarly valued. We will take a look at Shinhan Financial Group Co., Ltd. (NYSE:SHG), Lumen Technologies, Inc. (NYSE:LUMN), W.R. Berkley Corporation (NYSE:WRB), Gold Fields Limited (NYSE:GFI), Molina Healthcare, Inc. (NYSE:MOH), Citizens Financial Group Inc (NYSE:CFG), and The Boston Beer Company Inc (NYSE:SAM). This group of stocks' market valuations match AU's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SHG,4,18777,2 LUMN,31,762836,1 WRB,28,382157,1 GFI,15,508773,0 MOH,35,1418238,1 CFG,36,467127,-11 SAM,36,1212955,4 Average,26.4,681552,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $682 million. That figure was $586 million in AU's case. Citizens Financial Group Inc (NYSE:CFG) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 4 bullish hedge fund positions. AngloGold Ashanti Limited (NYSE:AU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AU is 45.2. 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 December 14th and surpassed the market again by 15.8 percentage points. Unfortunately AU wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AU investors were disappointed as the stock returned -19.1% since the end of September (through 12/14) 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.
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Disclosure: None. This article was originally published at Insider Monkey.