Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren't very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds' top 20 stock picks easily bested the broader market, at 37.4% compared to 27.5%, despite there being a few duds in there like Berkshire Hathaway (even their collective wisdom isn't perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is Agnico Eagle Mines Limited (NYSE:AEM) going to take off soon? The smart money is turning bullish. The number of long hedge fund bets rose by 4 in recent months. Our calculations also showed that AEM isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are numerous gauges shareholders employ to evaluate stocks. Some of the most innovative gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite fund managers can trounce the broader indices by a solid amount (see the details here).
[caption id="attachment_673972" align="aligncenter" width="473"] Blair Levinsky of Waratah Capital Advisors[/caption]
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 take a look at the key hedge fund action regarding Agnico Eagle Mines Limited (NYSE:AEM).
What does smart money think about Agnico Eagle Mines Limited (NYSE:AEM)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the second quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in AEM a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the number one position in Agnico Eagle Mines Limited (NYSE:AEM). Renaissance Technologies has a $134.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Paulson & Co, led by John Paulson, holding a $32.6 million position; 0.7% of its 13F portfolio is allocated to the company. Some other peers that are bullish comprise Ken Griffin's Citadel Investment Group, Stanley Druckenmiller's Duquesne Capital and Robert B. Gillam's McKinley Capital Management. In terms of the portfolio weights assigned to each position Chiron Investment Management allocated the biggest weight to Agnico Eagle Mines Limited (NYSE:AEM), around 2.84% of its portfolio. Claar Advisors is also relatively very bullish on the stock, setting aside 2.58 percent of its 13F equity portfolio to AEM.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, created the most valuable position in Agnico Eagle Mines Limited (NYSE:AEM). Waratah Capital Advisors had $5.4 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Tewksbury's Stevens Capital Management, Dmitry Balyasny's Balyasny Asset Management, and Minhua Zhang's Weld Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Agnico Eagle Mines Limited (NYSE:AEM) but similarly valued. We will take a look at Annaly Capital Management, Inc. (NYSE:NLY), Alliant Energy Corporation (NASDAQ:LNT), Sea Limited (NYSE:SE), and Phillips 66 Partners LP (NYSE:PSXP). This group of stocks' market values are similar to AEM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NLY,15,97109,-6 LNT,21,704846,-5 SE,64,3339840,4 PSXP,4,9647,1 Average,26,1037861,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $1038 million. That figure was $382 million in AEM's case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 4 bullish hedge fund positions. Agnico Eagle Mines Limited (NYSE:AEM) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on AEM as the stock returned 11.7% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.