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Is Fortuna Silver Mines Inc. (FSM) Going to Burn These Hedge Funds?

Abigail Fisher

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. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2019. What do these smart investors think about Fortuna Silver Mines Inc. (NYSE:FSM)?

Hedge fund interest in Fortuna Silver Mines Inc. (NYSE:FSM) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare FSM to other stocks including America First Multifamily Investors, L.P. (NASDAQ:ATAX), Falcon Minerals Corporation (NASDAQ:FLMN), and Azure Power Global Limited (NYSE:AZRE) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

To most traders, hedge funds are assumed to be slow, old financial vehicles of yesteryear. While there are over 8000 funds in operation today, Our researchers look at the masters of this group, approximately 750 funds. These money managers oversee the lion's share of the hedge fund industry's total capital, and by watching their finest picks, Insider Monkey has formulated a few investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_670485" align="aligncenter" width="473"] Michael Platt of BlueCrest Capital Mgmt.[/caption]

Michael Platt BlueCrest Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. Let's go over the latest hedge fund action regarding Fortuna Silver Mines Inc. (NYSE:FSM).

What have hedge funds been doing with Fortuna Silver Mines Inc. (NYSE:FSM)?

At Q3's end, a total of 12 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 FSM over the last 17 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Fortuna Silver Mines Inc. (NYSE:FSM), with a stake worth $25.1 million reported as of the end of September. Trailing Renaissance Technologies was Sprott Asset Management, which amassed a stake valued at $11.9 million. Millennium Management, Citadel Investment Group, and Arrowstreet Capital 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 Sprott Asset Management allocated the biggest weight to Fortuna Silver Mines Inc. (NYSE:FSM), around 3.04% of its 13F portfolio. Signition LP is also relatively very bullish on the stock, dishing out 0.39 percent of its 13F equity portfolio to FSM.

Due to the fact that Fortuna Silver Mines Inc. (NYSE:FSM) has faced falling interest from the aggregate hedge fund industry, it's safe to say that there is a sect of hedge funds that elected to cut their full holdings heading into Q4. It's worth mentioning that Nick Thakore's Diametric Capital said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $0 million in stock. Gavin Saitowitz and Cisco J. del Valle's fund, Springbok Capital, also sold off its stock, about $0 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Fortuna Silver Mines Inc. (NYSE:FSM) but similarly valued. These stocks are America First Multifamily Investors, L.P. (NASDAQ:ATAX), Falcon Minerals Corporation (NASDAQ:FLMN), Azure Power Global Limited (NYSE:AZRE), and Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT). This group of stocks' market caps resemble FSM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATAX,4,3901,1 FLMN,19,72785,-3 AZRE,4,7526,-2 SBT,5,7732,-1 Average,8,22986,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $56 million in FSM's case. Falcon Minerals Corporation (NASDAQ:FLMN) is the most popular stock in this table. On the other hand America First Multifamily Investors, L.P. (NASDAQ:ATAX) is the least popular one with only 4 bullish hedge fund positions. Fortuna Silver Mines Inc. (NYSE:FSM) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on FSM, though not to the same extent, as the stock returned 6.5% during the first two months of the fourth quarter and outperformed the market as well.

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

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