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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 (Recession is Imminent: We Need A Travel Ban NOW). 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 Gold Standard Ventures Corp (NYSE:GSV).
Gold Standard Ventures Corp (NYSE:GSV) shareholders have witnessed an increase in hedge fund interest in recent months. GSV was in 4 hedge funds' portfolios at the end of March. There were 3 hedge funds in our database with GSV holdings at the end of the previous quarter. Our calculations also showed that GSV 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 51 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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David E. Shaw of D.E. Shaw[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/dissed by legendary Bill Miller. 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. Keeping this in mind let's take a look at the key hedge fund action regarding Gold Standard Ventures Corp (NYSE:GSV).
How have hedgies been trading Gold Standard Ventures Corp (NYSE:GSV)?
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GSV over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Eric Sprott's Sprott Asset Management has the largest position in Gold Standard Ventures Corp (NYSE:GSV), worth close to $3.7 million, comprising 0.3% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish contain Ken Griffin's Citadel Investment Group, D. E. Shaw's D E Shaw and . In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Gold Standard Ventures Corp (NYSE:GSV), around 0.34% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, setting aside 0.0003 percent of its 13F equity portfolio to GSV.
Now, specific money managers have been driving this bullishness. Sprott Asset Management, managed by Eric Sprott, created the most outsized position in Gold Standard Ventures Corp (NYSE:GSV). Sprott Asset Management had $3.7 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $0 million position during the quarter.
Let's also examine hedge fund activity in other stocks similar to Gold Standard Ventures Corp (NYSE:GSV). We will take a look at Kandi Technolgies Group, Inc. (NASDAQ:KNDI), MMA Capital Holdings, Inc. (NASDAQ:MMAC), SM Energy Company (NYSE:SM), and SeaChange International, Inc. (NASDAQ:SEAC). This group of stocks' market values are similar to GSV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KNDI,1,102,-2 MMAC,3,3297,0 SM,17,19963,-5 SEAC,14,11186,2 Average,8.75,8637,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $4 million in GSV's case. SM Energy Company (NYSE:SM) is the most popular stock in this table. On the other hand Kandi Technolgies Group, Inc. (NASDAQ:KNDI) is the least popular one with only 1 bullish hedge fund positions. Gold Standard Ventures Corp (NYSE:GSV) is not the least popular stock in this group but hedge fund interest is still below 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on GSV as the stock returned 44.4% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.