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Should You Buy Vista Gold Corp. (VGZ)?

Abigail Fisher

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Vista Gold Corp. (NYSE:VGZ) based on that data.

Vista Gold Corp. (NYSE:VGZ) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the first quarter of 2020. 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 Richardson Electronics, Ltd. (NASDAQ:RELL), JMP Group LLC (NYSE:JMP), and Southwest Georgia Financial Corporation (NYSE:SGB) to gather more data points. Our calculations also showed that VGZ isn't among the 30 most popular stocks among hedge funds (click for Q1 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.

In today’s marketplace there are dozens of metrics shareholders have at their disposal to value stocks. A pair of the most underrated metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best fund managers can trounce their index-focused peers by a solid margin (see the details here).

[caption id="attachment_322510" align="aligncenter" width="399"] New York Stock Exchange[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's review the key hedge fund action surrounding Vista Gold Corp. (NYSE:VGZ).

What does smart money think about Vista Gold Corp. (NYSE:VGZ)?

At Q1's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in VGZ a year ago. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Sun Valley Gold, managed by Peter Franklin Palmedo, holds the number one position in Vista Gold Corp. (NYSE:VGZ). Sun Valley Gold has a $8.7 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Renaissance Technologies, holding a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Sun Valley Gold allocated the biggest weight to Vista Gold Corp. (NYSE:VGZ), around 0.7% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, dishing out 0.0004 percent of its 13F equity portfolio to VGZ.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Schonfeld Strategic Advisors).

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Vista Gold Corp. (NYSE:VGZ) but similarly valued. These stocks are Richardson Electronics, Ltd. (NASDAQ:RELL), JMP Group LLC (NYSE:JMP), Southwest Georgia Financial Corporation (NYSE:SGB), and Nicholas Financial, Inc. (NASDAQ:NICK). This group of stocks' market values are similar to VGZ's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RELL,4,9036,0 JMP,2,95,1 SGB,2,525,-1 NICK,3,15398,1 Average,2.75,6264,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $9 million in VGZ's case. Richardson Electronics, Ltd. (NASDAQ:RELL) is the most popular stock in this table. On the other hand JMP Group LLC (NYSE:JMP) is the least popular one with only 2 bullish hedge fund positions. Vista Gold Corp. (NYSE:VGZ) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on VGZ as the stock returned 87.2% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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