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In this article we will analyze whether IAMGOLD Corporation (NYSE:IAG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is IAG a good stock to buy now? IAMGOLD Corporation (NYSE:IAG) was in 16 hedge funds' portfolios at the end of September. The all time high for this statistic is 18. IAG shareholders have witnessed a decrease in hedge fund sentiment lately. There were 18 hedge funds in our database with IAG holdings at the end of June. Our calculations also showed that IAG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most market participants, hedge funds are seen as worthless, old investment tools of the past. While there are greater than 8000 funds trading at present, We hone in on the crème de la crème of this club, about 850 funds. These hedge fund managers watch over most of the smart money's total asset base, and by monitoring their matchless stock picks, Insider Monkey has identified several investment strategies that have historically outpaced the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
John Paulson of Paulson & Co
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to go over the fresh hedge fund action regarding IAMGOLD Corporation (NYSE:IAG).
Do Hedge Funds Think IAG Is A Good Stock To Buy Now?
At third quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the second quarter of 2020. On the other hand, there were a total of 14 hedge funds with a bullish position in IAG a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of IAMGOLD Corporation (NYSE:IAG), with a stake worth $90.7 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $18.8 million. Two Sigma Advisors, Paulson & Co, and Royce & Associates 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 Paulson & Co allocated the biggest weight to IAMGOLD Corporation (NYSE:IAG), around 0.22% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, designating 0.18 percent of its 13F equity portfolio to IAG.
Seeing as IAMGOLD Corporation (NYSE:IAG) has witnessed falling interest from hedge fund managers, we can see that there lies a certain "tier" of hedgies who were dropping their positions entirely in the third quarter. It's worth mentioning that Louis Bacon's Moore Global Investments cut the largest position of the "upper crust" of funds tracked by Insider Monkey, worth about $5.6 million in stock, and Noam Gottesman's GLG Partners was right behind this move, as the fund dropped about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as IAMGOLD Corporation (NYSE:IAG) but similarly valued. These stocks are Investors Bancorp, Inc. (NASDAQ:ISBC), Ambarella Inc (NASDAQ:AMBA), Euronav NV (NYSE:EURN), Barnes Group Inc. (NYSE:B), Enable Midstream Partners LP (NYSE:ENBL), Callaway Golf Company (NYSE:ELY), and Studio City International Holdings Limited (NYSE:MSC). All of these stocks' market caps match IAG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ISBC,28,138234,3 AMBA,34,191991,7 EURN,11,67614,-6 B,13,37329,-6 ENBL,4,8820,-1 ELY,32,390873,8 MSC,3,277757,0 Average,17.9,158945,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $151 million in IAG's case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 3 bullish hedge fund positions. IAMGOLD Corporation (NYSE:IAG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IAG is 50.6. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately IAG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IAG investors were disappointed as the stock returned -9.7% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.