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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Alamos Gold Inc (NYSE:AGI) to find out whether there were any major changes in hedge funds' views.
Alamos Gold Inc (NYSE:AGI) has experienced an increase in support from the world's most elite money managers lately. Alamos Gold Inc (NYSE:AGI) was in 22 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 17 hedge funds in our database with AGI holdings at the end of December. Our calculations also showed that AGI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Rudolph Kluiber of GRT Capital Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's check out the fresh hedge fund action encompassing Alamos Gold Inc (NYSE:AGI).
Do Hedge Funds Think AGI Is A Good Stock To Buy Now?
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the fourth quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in AGI a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Alamos Gold Inc (NYSE:AGI) was held by Renaissance Technologies, which reported holding $77.4 million worth of stock at the end of December. It was followed by Sprott Asset Management with a $49.5 million position. Other investors bullish on the company included Sun Valley Gold, Royce & Associates, and Arrowstreet 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 13.99% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 2.97 percent of its 13F equity portfolio to AGI.
Consequently, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Alamos Gold Inc (NYSE:AGI). Balyasny Asset Management had $8.8 million invested in the company at the end of the quarter. Warren Lammert's Granite Point Capital also made a $0.8 million investment in the stock during the quarter. The other funds with brand new AGI positions are Karim Abbadi and Edward McBride's Centiva Capital, Mika Toikka's AlphaCrest Capital Management, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk's GRT Capital Partners.
Let's now review 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 Cardlytics, Inc. (NASDAQ:CDLX), Corsair Gaming, Inc. (NASDAQ:CRSR), Clover Health Investments, Corp. (NASDAQ:CLOV), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Seer, Inc. (NASDAQ:SEER), Poshmark, Inc. (NASDAQ:POSH), and Hecla Mining Company (NYSE:HL). 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 CDLX,38,1012610,6 CRSR,9,22426,-3 CLOV,23,822813,23 KLIC,34,428667,-2 SEER,12,342872,-2 POSH,14,26589,14 HL,16,39714,6 Average,20.9,385099,6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $268 million in AGI's case. Cardlytics, Inc. (NASDAQ:CDLX) is the most popular stock in this table. On the other hand Corsair Gaming, Inc. (NASDAQ:CRSR) is the least popular one with only 9 bullish hedge fund positions. Alamos Gold Inc (NYSE:AGI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AGI is 62.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately AGI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AGI were disappointed as the stock returned 0.9% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.