At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Gold Resource Corporation (NYSE:GORO) makes for a good investment right now.
Gold Resource Corporation (NYSE:GORO) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Our calculations also showed that GORO 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.
According to most market participants, hedge funds are viewed as unimportant, old investment vehicles of years past. While there are greater than 8000 funds in operation at present, Our researchers choose to focus on the top tier of this club, around 750 funds. It is estimated that this group of investors shepherd bulk of all hedge funds' total capital, and by watching their best stock picks, Insider Monkey has unsheathed a few investment strategies that have historically outperformed Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year 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_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a peek at the recent hedge fund action encompassing Gold Resource Corporation (NYSE:GORO).
How have hedgies been trading Gold Resource Corporation (NYSE:GORO)?
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GORO over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Gold Resource Corporation (NYSE:GORO), which was worth $2.3 million at the end of the third quarter. On the second spot was Winton Capital Management which amassed $1.7 million worth of shares. Sprott Asset Management, 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 Sprott Asset Management allocated the biggest weight to Gold Resource Corporation (NYSE:GORO), around 0.4% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to GORO.
Seeing as Gold Resource Corporation (NYSE:GORO) has experienced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of hedgies who were dropping their entire stakes by the end of the third quarter. It's worth mentioning that John Overdeck and David Siegel's Two Sigma Advisors dumped the biggest investment of the 750 funds monitored by Insider Monkey, worth about $0.3 million in stock, and David E. Shaw's D E Shaw was right behind this move, as the fund cut about $0.1 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Gold Resource Corporation (NYSE:GORO) but similarly valued. These stocks are Northeast Bank (NASDAQ:NBN), Norwood Financial Corp. (NASDAQ:NWFL), GlobalSCAPE, Inc. (NYSE:GSB), and RCI Hospitality Holdings, Inc. (NASDAQ:RICK). All of these stocks' market caps resemble GORO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NBN,6,38130,0 NWFL,2,2150,0 GSB,5,21166,0 RICK,8,12926,1 Average,5.25,18593,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $6 million in GORO's case. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is the most popular stock in this table. On the other hand Norwood Financial Corp. (NASDAQ:NWFL) is the least popular one with only 2 bullish hedge fund positions. Gold Resource Corporation (NYSE:GORO) 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 GORO as the stock returned 46.4% 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.