"The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak," are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards SSR Mining Inc. (NASDAQ:SSRM) and see how it was affected.
SSR Mining Inc. (NASDAQ:SSRM) was in 16 hedge funds' portfolios at the end of June. SSRM has experienced an increase in support from the world's most elite money managers lately. There were 13 hedge funds in our database with SSRM holdings at the end of the previous quarter. Our calculations also showed that SSRM 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.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Let's take a gander at the recent hedge fund action encompassing SSR Mining Inc. (NASDAQ:SSRM).
What have hedge funds been doing with SSR Mining Inc. (NASDAQ:SSRM)?
At Q2's end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SSRM over the last 16 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in SSR Mining Inc. (NASDAQ:SSRM) was held by Renaissance Technologies, which reported holding $77.7 million worth of stock at the end of March. It was followed by Paulson & Co with a $15.8 million position. Other investors bullish on the company included Sun Valley Gold, Sprott Asset Management, and Citadel Investment Group.
As one would reasonably expect, specific money managers were leading the bulls' herd. Paulson & Co, managed by John Paulson, created the most outsized position in SSR Mining Inc. (NASDAQ:SSRM). Paulson & Co had $15.8 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $2.8 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Peter Algert and Kevin Coldiron's Algert Coldiron Investors, and Ray Dalio's Bridgewater Associates.
Let's now review hedge fund activity in other stocks similar to SSR Mining Inc. (NASDAQ:SSRM). These stocks are Asbury Automotive Group, Inc. (NYSE:ABG), Dril-Quip, Inc. (NYSE:DRQ), Delphi Technologies PLC (NYSE:DLPH), and BioTelemetry, Inc. (NASDAQ:BEAT). This group of stocks' market valuations are closest to SSRM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABG,17,224636,2 DRQ,18,158872,1 DLPH,25,318872,1 BEAT,16,38086,-5 Average,19,185117,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $139 million in SSRM's case. Delphi Technologies PLC (NYSE:DLPH) is the most popular stock in this table. On the other hand BioTelemetry, Inc. (NASDAQ:BEAT) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks SSR Mining Inc. (NASDAQ:SSRM) is even less popular than BEAT. Hedge funds clearly dropped the ball on SSRM as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 SSRM as the stock returned 6.2% during the third quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.