Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Alamos Gold Inc (NYSE:AGI) in this article.
Is Alamos Gold Inc (NYSE:AGI) a bargain? Prominent investors are betting on the stock. The number of long hedge fund bets moved up by 3 lately. Our calculations also showed that AGI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). AGI was in 15 hedge funds' portfolios at the end of the third quarter of 2019. There were 12 hedge funds in our database with AGI holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[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 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 take a look at the latest hedge fund action encompassing Alamos Gold Inc (NYSE:AGI).
What have hedge funds been doing with Alamos Gold Inc (NYSE:AGI)?
Heading into the fourth quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in AGI a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the number one position in Alamos Gold Inc (NYSE:AGI), worth close to $66.9 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $43.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism comprise Peter Franklin Palmedo's Sun Valley Gold, Chuck Royce's Royce & Associates and Brian Ashford-Russell and Tim Woolley's Polar Capital. In terms of the portfolio weights assigned to each position Sun Valley Gold allocated the biggest weight to Alamos Gold Inc (NYSE:AGI), around 9.91% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, setting aside 0.33 percent of its 13F equity portfolio to AGI.
As aggregate interest increased, key hedge funds have jumped into Alamos Gold Inc (NYSE:AGI) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest position in Alamos Gold Inc (NYSE:AGI). Two Sigma Advisors had $1.1 million invested in the company at the end of the quarter. Mark Travis's Intrepid Capital Management also initiated a $0.6 million position during the quarter. The following funds were also among the new AGI investors: Joel Greenblatt's Gotham Asset Management, Michael Gelband's ExodusPoint Capital, and Dmitry Balyasny's Balyasny Asset Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Alamos Gold Inc (NYSE:AGI) but similarly valued. We will take a look at Halozyme Therapeutics, Inc. (NASDAQ:HALO), Independent Bank Group Inc (NASDAQ:IBTX), AlarmCom Holdings Inc (NASDAQ:ALRM), and Cadence Bancorporation (NYSE:CADE). This group of stocks' market caps match AGI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HALO,24,154349,5 IBTX,12,100233,3 ALRM,18,162049,-1 CADE,20,105054,2 Average,18.5,130421,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $221 million in AGI's case. Halozyme Therapeutics, Inc. (NASDAQ:HALO) is the most popular stock in this table. On the other hand Independent Bank Group Inc (NASDAQ:IBTX) is the least popular one with only 12 bullish hedge fund positions. Alamos Gold Inc (NYSE:AGI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately AGI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AGI investors were disappointed as the stock returned -2.2% during the first two months of the fourth quarter 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.