We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Harmony Gold Mining Company Limited (NYSE:HMY).
Harmony Gold Mining Company Limited (NYSE:HMY) shareholders have witnessed an increase in activity from the world's largest hedge funds lately. Our calculations also showed that HMY isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the fresh hedge fund action encompassing Harmony Gold Mining Company Limited (NYSE:HMY).
Hedge fund activity in Harmony Gold Mining Company Limited (NYSE:HMY)
At Q2's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards HMY over the last 16 quarters. So, let's examine 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 Harmony Gold Mining Company Limited (NYSE:HMY), with a stake worth $13.7 million reported as of the end of March. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $9.7 million. Arrowstreet Capital, AQR Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key hedge funds have jumped into Harmony Gold Mining Company Limited (NYSE:HMY) headfirst. Manatuck Hill Partners, managed by Mark Broach, established the biggest position in Harmony Gold Mining Company Limited (NYSE:HMY). Manatuck Hill Partners had $0.5 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Harmony Gold Mining Company Limited (NYSE:HMY) but similarly valued. These stocks are Sonos, Inc. (NASDAQ:SONO), Encore Wire Corporation (NASDAQ:WIRE), Editas Medicine, Inc. (NASDAQ:EDIT), and 1st Source Corporation (NASDAQ:SRCE). This group of stocks' market caps match HMY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SONO,21,84443,-1 WIRE,15,48049,-1 EDIT,14,114839,-1 SRCE,6,28585,-3 Average,14,68979,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $41 million in HMY's case. Sonos, Inc. (NASDAQ:SONO) is the most popular stock in this table. On the other hand 1st Source Corporation (NASDAQ:SRCE) is the least popular one with only 6 bullish hedge fund positions. Harmony Gold Mining Company Limited (NYSE:HMY) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on HMY as the stock returned 25.1% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.