The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards IAMGOLD Corporation (NYSE:IAG).
Is IAMGOLD Corporation (NYSE:IAG) undervalued? Hedge funds are selling. The number of bullish hedge fund bets were trimmed by 2 recently. 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 below for Q2 rankings). IAG was in 13 hedge funds' portfolios at the end of September. There were 15 hedge funds in our database with IAG holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 stocks that are in our short portfolio.
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to check out the key hedge fund action surrounding IAMGOLD Corporation (NYSE:IAG).
How are hedge funds trading IAMGOLD Corporation (NYSE:IAG)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in IAG a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in IAMGOLD Corporation (NYSE:IAG). Renaissance Technologies has a $78.4 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Sun Valley Gold, managed by Peter Franklin Palmedo, which holds a $25.8 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions encompass Ken Griffin's Citadel Investment Group, John Overdeck and David Siegel's Two Sigma Advisors and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Sun Valley Gold allocated the biggest weight to IAMGOLD Corporation (NYSE:IAG), around 7.08% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 0.61 percent of its 13F equity portfolio to IAG.
Since IAMGOLD Corporation (NYSE:IAG) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain "tier" of hedgies that elected to cut their full holdings last quarter. Interestingly, Douglas Dethy's DC Capital Partners cut the biggest stake of all the hedgies tracked by Insider Monkey, valued at about $3.4 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also said goodbye to its stock, about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's check out hedge fund activity in other stocks similar to IAMGOLD Corporation (NYSE:IAG). These stocks are Redwood Trust, Inc. (NYSE:RWT), Owens-Illinois Inc (NYSE:OI), Brinker International, Inc. (NYSE:EAT), and ICF International Inc (NASDAQ:ICFI). This group of stocks' market valuations are similar to IAG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RWT,15,119122,2 OI,22,355523,1 EAT,26,231758,-2 ICFI,10,31687,-5 Average,18.25,184523,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $149 million in IAG's case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand ICF International Inc (NASDAQ:ICFI) is the least popular one with only 10 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 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. A small number of hedge funds were also right about betting on IAG, though not to the same extent, as the stock returned 6.2% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.