U.S. Markets closed

Hedge Funds Have Never Been More Bullish On Newmont Goldcorp (NEM)

Nina Todic

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 34.7% through November 22nd and outperformed the broader market benchmark by 8.5 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Hedge fund interest in Newmont Goldcorp Corporation (NYSE:NEM) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NEM to other stocks including Canadian Pacific Railway Limited (NYSE:CP), The Royal Bank of Scotland Group plc (NYSE:RBS), and Barrick Gold Corporation (NYSE:GOLD) to get a better sense of its popularity.

To most shareholders, hedge funds are assumed to be worthless, old investment vehicles of years past. While there are greater than 8000 funds trading today, Our experts hone in on the bigwigs of this group, approximately 750 funds. It is estimated that this group of investors have their hands on the majority of the hedge fund industry's total asset base, and by tailing their inimitable equity investments, Insider Monkey has figured out several investment strategies that have historically outpaced the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman of GLG Partners[/caption]

Noam Gottesman GLG Partners

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's view the latest hedge fund action surrounding Newmont Goldcorp Corporation (NYSE:NEM).

What does smart money think about Newmont Goldcorp Corporation (NYSE:NEM)?

At Q3's end, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in NEM 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.

No of Hedge Funds with NEM Positions

More specifically, Renaissance Technologies was the largest shareholder of Newmont Goldcorp Corporation (NYSE:NEM), with a stake worth $275.6 million reported as of the end of September. Trailing Renaissance Technologies was GLG Partners, which amassed a stake valued at $91 million. International Value Advisers, AQR Capital Management, and D E Shaw 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 Anchor Bolt Capital allocated the biggest weight to Newmont Goldcorp Corporation (NYSE:NEM), around 6% of its portfolio. International Value Advisers is also relatively very bullish on the stock, earmarking 3.1 percent of its 13F equity portfolio to NEM.

Because Newmont Goldcorp Corporation (NYSE:NEM) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there lies a certain "tier" of funds that elected to cut their positions entirely last quarter. Intriguingly, Karim Abbadi and Edward McBride's Centiva Capital said goodbye to the largest stake of all the hedgies followed by Insider Monkey, valued at close to $8.7 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $4.6 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now take a look at hedge fund activity in other stocks similar to Newmont Goldcorp Corporation (NYSE:NEM). These stocks are Canadian Pacific Railway Limited (NYSE:CP), The Royal Bank of Scotland Group plc (NYSE:RBS), Barrick Gold Corporation (NYSE:GOLD), and Credit Suisse Group AG (NYSE:CS). All of these stocks' market caps are closest to NEM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CP,31,1781495,1 RBS,5,29381,-1 GOLD,42,1443824,3 CS,14,226949,3 Average,23,870412,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $870 million. That figure was $868 million in NEM's case. Barrick Gold Corporation (NYSE:GOLD) is the most popular stock in this table. On the other hand The Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 5 bullish hedge fund positions. Newmont Goldcorp Corporation (NYSE:NEM) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately NEM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NEM were disappointed as the stock returned 0.4% during the fourth quarter (through 11/22) 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 many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content