At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SSR Mining Inc. (NASDAQ:SSRM) at the end of the first quarter and determine whether the smart money was really smart about this stock.
SSR Mining Inc. (NASDAQ:SSRM) was in 22 hedge funds' portfolios at the end of the first quarter of 2020. SSRM has experienced an increase in support from the world's most elite money managers of late. There were 16 hedge funds in our database with SSRM holdings at the end of the previous quarter. Our calculations also showed that SSRM 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.
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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_25305" align="aligncenter" width="393"] John Paulson of Paulson & Co[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind we're going to check out the latest hedge fund action encompassing SSR Mining Inc. (NASDAQ:SSRM).
How are hedge funds trading SSR Mining Inc. (NASDAQ:SSRM)?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SSRM over the last 18 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.
More specifically, Renaissance Technologies was the largest shareholder of SSR Mining Inc. (NASDAQ:SSRM), with a stake worth $79.5 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $19.5 million. Paulson & Co, Citadel Investment Group, and Sprott Asset Management 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 SSR Mining Inc. (NASDAQ:SSRM), around 0.5% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, earmarking 0.47 percent of its 13F equity portfolio to SSRM.
As aggregate interest increased, key hedge funds were leading the bulls' herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in SSR Mining Inc. (NASDAQ:SSRM). Marshall Wace LLP had $2 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $1 million investment in the stock during the quarter. The other funds with brand new SSRM positions are Joel Greenblatt's Gotham Asset Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's now take a look at hedge fund activity in other stocks similar to SSR Mining Inc. (NASDAQ:SSRM). We will take a look at Fanhua Inc. (NASDAQ:FANH), Palomar Holdings, Inc. (NASDAQ:PLMR), Vector Group Ltd (NYSE:VGR), and Hostess Brands, Inc. (NASDAQ:TWNK). This group of stocks' market values are closest to SSRM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FANH,5,4287,-2 PLMR,7,47406,-1 VGR,16,123143,-1 TWNK,30,165605,-7 Average,14.5,85110,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $152 million in SSRM's case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Fanhua Inc. (NASDAQ:FANH) is the least popular one with only 5 bullish hedge fund positions. SSR Mining Inc. (NASDAQ:SSRM) 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on SSRM as the stock returned 87.4% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.