Does Great Panther Mining Limited (NYSE:GPL) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Great Panther Mining Limited (NYSE:GPL) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of September. At the end of this article we will also compare GPL to other stocks including Codorus Valley Bancorp, Inc. (NASDAQ:CVLY), Ooma Inc (NYSE:OOMA), and GigCapital2, Inc. (NYSE:GIX) 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.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a peek at the fresh hedge fund action encompassing Great Panther Mining Limited (NYSE:GPL).
How have hedgies been trading Great Panther Mining Limited (NYSE:GPL)?
Heading into the fourth quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPL over the last 17 quarters. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Great Panther Mining Limited (NYSE:GPL), which was worth $2 million at the end of the third quarter. On the second spot was Sprott Asset Management which amassed $0.7 million worth of shares. Two Sigma Advisors, Millennium Management, and Citadel Investment Group 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 Great Panther Mining Limited (NYSE:GPL), around 0.17% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0017 percent of its 13F equity portfolio to GPL.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Great Panther Mining Limited (NYSE:GPL) but similarly valued. We will take a look at Codorus Valley Bancorp, Inc. (NASDAQ:CVLY), Ooma Inc (NYSE:OOMA), GigCapital2, Inc. (NYSE:GIX), and Hurco Companies, Inc. (NASDAQ:HURC). This group of stocks' market values resemble GPL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVLY,5,17100,0 OOMA,14,55956,-1 GIX,8,19892,-2 HURC,6,36498,-1 Average,8.25,32362,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $3 million in GPL's case. Ooma Inc (NYSE:OOMA) is the most popular stock in this table. On the other hand Codorus Valley Bancorp, Inc. (NASDAQ:CVLY) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Great Panther Mining Limited (NYSE:GPL) is even less popular than CVLY. Hedge funds dodged a bullet by taking a bearish stance towards GPL. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GPL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); GPL investors were disappointed as the stock returned -38% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.