Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Barrick Gold Corporation (NASDAQ:GOLD), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Hedge fund interest in Barrick Gold Corporation (NASDAQ:GOLD) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Lear Corporation (NYSE:LEA), Zions Bancorporation (NASDAQ:ZION), and Advanced Semiconductor Engineering (NYSE:ASX) to gather more data points.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We're going to go over the latest hedge fund action encompassing Barrick Gold Corporation (NASDAQ:GOLD).
What does the smart money think about Barrick Gold Corporation (NASDAQ:GOLD)?
Heading into the first quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GOLD over the last 14 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Robert Emil Zoellner's Alpine Associates has the largest position in Barrick Gold Corporation (NASDAQ:GOLD), worth close to $120.6 million, accounting for 5% of its total 13F portfolio. The second largest stake is held by Paulson & Co, led by John Paulson, holding a $40.4 million position; 1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions comprise Noam Gottesman's GLG Partners, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and John Overdeck and David Siegel's Two Sigma Advisors.
Because Barrick Gold Corporation (NASDAQ:GOLD) has faced declining sentiment from hedge fund managers, it's easy to see that there exists a select few funds who sold off their full holdings last quarter. Interestingly, Eric Sprott's Sprott Asset Management dropped the largest stake of the "upper crust" of funds monitored by Insider Monkey, totaling about $12.4 million in stock. Andy Redleaf's fund, Whitebox Advisors, also dropped its stock, about $10.3 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to Barrick Gold Corporation (NASDAQ:GOLD). These stocks are Lear Corporation (NYSE:LEA), Zions Bancorporation, National Association (NASDAQ:ZION), ASE Technology Holding Co., Ltd. (NYSE:ASX), and OGE Energy Corp. (NYSE:OGE). This group of stocks' market valuations are similar to GOLD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LEA,29,647720,-5 ZION,42,668356,10 ASX,7,174925,0 OGE,16,293216,-3 Average,23.5,446054,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $446 million. That figure was $270 million in GOLD's case. Zions Bancorporation, National Association (NASDAQ:ZION) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 7 bullish hedge fund positions. Barrick Gold Corporation (NASDAQ:GOLD) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. A few hedge funds were also right about betting on GOLD as the stock returned 24.6% and outperformed the market as well. You can see the entire list of these shrewd hedge funds here.
Disclosure: None. This article was originally published at Insider Monkey.