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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards New Gold Inc. (NYSE:NGD).
Is NGD a good stock to buy now? New Gold Inc. (NYSE:NGD) investors should pay attention to an increase in activity from the world's largest hedge funds of late. New Gold Inc. (NYSE:NGD) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 19. There were 11 hedge funds in our database with NGD positions at the end of the second quarter. Our calculations also showed that NGD 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.
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.
David Iben of Kopernik Global Investors
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. With all of this in mind we're going to take a peek at the latest hedge fund action surrounding New Gold Inc. (NYSE:NGD).
Do Hedge Funds Think NGD Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the second quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in NGD a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in New Gold Inc. (NYSE:NGD), worth close to $37.4 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Kopernik Global Investors, led by David Iben, holding a $37.1 million position; the fund has 5.7% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, John Overdeck and David Siegel's Two Sigma Advisors and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to New Gold Inc. (NYSE:NGD), around 5.75% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, designating 0.09 percent of its 13F equity portfolio to NGD.
Consequently, some big names have jumped into New Gold Inc. (NYSE:NGD) headfirst. ExodusPoint Capital, managed by Michael Gelband, assembled the most valuable position in New Gold Inc. (NYSE:NGD). ExodusPoint Capital had $0.1 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also initiated a $0 million position during the quarter. The only other fund with a brand new NGD position is Ken Fisher's Fisher Asset Management.
Let's go over hedge fund activity in other stocks similar to New Gold Inc. (NYSE:NGD). We will take a look at SilverCrest Metals Inc. (NYSE:SILV), Atrion Corporation (NASDAQ:ATRI), Mack Cali Realty Corp (NYSE:CLI), Victory Capital Holdings, Inc. (NASDAQ:VCTR), Revolve Group, Inc. (NYSE:RVLV), First Bancorp (NYSE:FBP), and CSW Industrials, Inc. (NASDAQ:CSWI). This group of stocks' market caps resemble NGD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SILV,12,189586,3 ATRI,10,57819,-2 CLI,11,39973,-2 VCTR,8,60210,-1 RVLV,21,78858,10 FBP,21,110879,-5 CSWI,16,29403,-3 Average,14.1,80961,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $100 million in NGD's case. Revolve Group, Inc. (NYSE:RVLV) is the most popular stock in this table. On the other hand Victory Capital Holdings, Inc. (NASDAQ:VCTR) is the least popular one with only 8 bullish hedge fund positions. New Gold Inc. (NYSE:NGD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NGD is 40.3. 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. 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 still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on NGD as the stock returned 24.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.