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Hedge Funds Are Piling Into U.S. Global Investors, Inc. (GROW)

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·6 min read
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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards U.S. Global Investors, Inc. (NASDAQ:GROW).

U.S. Global Investors, Inc. (NASDAQ:GROW) has seen an increase in support from the world's most elite money managers of late. U.S. Global Investors, Inc. (NASDAQ:GROW) was in 10 hedge funds' portfolios at the end of June. The all time high for this statistic is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 7 hedge funds in our database with GROW holdings at the end of March. Our calculations also showed that GROW isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In today’s marketplace there are several tools shareholders employ to appraise publicly traded companies. A duo of the most useful tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outperform the S&P 500 by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .

Chuck Royce
Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 analyze the new hedge fund action surrounding U.S. Global Investors, Inc. (NASDAQ:GROW).

Do Hedge Funds Think GROW Is A Good Stock To Buy Now?

At Q2's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 43% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GROW over the last 24 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GROW A Good Stock To Buy?
Is GROW A Good Stock To Buy?

More specifically, Royce & Associates was the largest shareholder of U.S. Global Investors, Inc. (NASDAQ:GROW), with a stake worth $3.7 million reported as of the end of June. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $0.8 million. Marshall Wace LLP, Citadel Investment Group, and Millennium Management 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 Diametric Capital allocated the biggest weight to U.S. Global Investors, Inc. (NASDAQ:GROW), around 0.08% of its 13F portfolio. Corsair Capital Management is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to GROW.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in U.S. Global Investors, Inc. (NASDAQ:GROW). Marshall Wace LLP had $0.6 million invested in the company at the end of the quarter. Jay Petschek and Steven Major's Corsair Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a brand new GROW position is Matthew L Pinz's Pinz Capital.

Let's check out hedge fund activity in other stocks similar to U.S. Global Investors, Inc. (NASDAQ:GROW). We will take a look at Support.com, Inc. (NASDAQ:SPRT), Digital Ally, Inc. (NASDAQ:DGLY), LAIX Inc. (NYSE:LAIX), Friedman Industries (NYSE:FRD), FreightCar America, Inc. (NASDAQ:RAIL), Nine Energy Service, Inc. (NYSE:NINE), and Synalloy Corporation (NASDAQ:SYNL). All of these stocks' market caps are similar to GROW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPRT,5,4048,1 DGLY,4,934,0 LAIX,4,834,1 FRD,1,7319,0 RAIL,8,4435,0 NINE,4,5778,-2 SYNL,2,1904,-1 Average,4,3607,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $7 million in GROW's case. FreightCar America, Inc. (NASDAQ:RAIL) is the most popular stock in this table. On the other hand Friedman Industries (NYSE:FRD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks U.S. Global Investors, Inc. (NASDAQ:GROW) is more popular among hedge funds. Our overall hedge fund sentiment score for GROW is 88. 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. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Unfortunately GROW wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GROW were disappointed as the stock returned -8.5% since the end of the second quarter (through 9/27) 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 most of these stocks already outperformed the market since 2019.

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