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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about McEwen Mining Inc (NYSE:MUX) in this article.
Is MUX a good stock to buy now? Investors who are in the know were taking a bullish view. The number of bullish hedge fund bets advanced by 1 in recent months. McEwen Mining Inc (NYSE:MUX) was in 10 hedge funds' portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that MUX 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). There were 9 hedge funds in our database with MUX holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Eric Sprott of Sprott Asset Management
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. Now we're going to take a gander at the new hedge fund action surrounding McEwen Mining Inc (NYSE:MUX).
Do Hedge Funds Think MUX Is A Good Stock To Buy Now?
At third quarter's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MUX over the last 21 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in McEwen Mining Inc (NYSE:MUX). Millennium Management has a $1.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Sprott Asset Management, led by Eric Sprott, holding a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish include Renaissance Technologies, David Harding's Winton Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to McEwen Mining Inc (NYSE:MUX), around 0.05% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to MUX.
Now, key money managers have jumped into McEwen Mining Inc (NYSE:MUX) headfirst. Sprott Asset Management, managed by Eric Sprott, created the biggest position in McEwen Mining Inc (NYSE:MUX). Sprott Asset Management had $1.1 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $0 million investment in the stock during the quarter. The only other fund with a brand new MUX position is Karim Abbadi and Edward McBride's Centiva Capital.
Let's also examine hedge fund activity in other stocks similar to McEwen Mining Inc (NYSE:MUX). We will take a look at Establishment Labs Holdings Inc. (NASDAQ:ESTA), QCR Holdings, Inc. (NASDAQ:QCRH), Avid Bioservices, Inc. (NASDAQ:CDMO), Napco Security Technologies Inc (NASDAQ:NSSC), MannKind Corporation (NASDAQ:MNKD), First Financial Corp (NASDAQ:THFF), and Global Cord Blood Corp (NYSE:CO). All of these stocks' market caps resemble MUX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESTA,12,78833,1 QCRH,11,41965,0 CDMO,16,51583,1 NSSC,2,1228,-6 MNKD,7,5789,-6 THFF,10,23201,2 CO,8,23946,-3 Average,9.4,32364,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $5 million in MUX's case. Avid Bioservices, Inc. (NASDAQ:CDMO) is the most popular stock in this table. On the other hand Napco Security Technologies Inc (NASDAQ:NSSC) is the least popular one with only 2 bullish hedge fund positions. McEwen Mining Inc (NYSE:MUX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MUX is 59.6. 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 positive signal but 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 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately MUX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MUX were disappointed as the stock returned -2.8% since the end of September (through 12/8) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.