Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Pretium Resources Inc (NYSE:PVG) from the perspective of those elite funds.
Pretium Resources Inc (NYSE:PVG) has experienced a decrease in hedge fund interest lately. PVG was in 21 hedge funds' portfolios at the end of the first quarter of 2019. There were 22 hedge funds in our database with PVG positions at the end of the previous quarter. Our calculations also showed that pvg isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the recent hedge fund action surrounding Pretium Resources Inc (NYSE:PVG).
What does the smart money think about Pretium Resources Inc (NYSE:PVG)?
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PVG over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Polar Capital was the largest shareholder of Pretium Resources Inc (NYSE:PVG), with a stake worth $16.3 million reported as of the end of March. Trailing Polar Capital was Bridger Management, which amassed a stake valued at $14.1 million. Sprott Asset Management, Sun Valley Gold, and Anchor Bolt Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Pretium Resources Inc (NYSE:PVG) has experienced bearish sentiment from the smart money, we can see that there was a specific group of fund managers that decided to sell off their positions entirely in the third quarter. At the top of the heap, Robert Polak's Anchor Bolt Capital said goodbye to the largest investment of all the hedgies watched by Insider Monkey, valued at close to $30.6 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund sold off about $3.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let's now review hedge fund activity in other stocks similar to Pretium Resources Inc (NYSE:PVG). These stocks are NBT Bancorp Inc. (NASDAQ:NBTB), Lattice Semiconductor Corporation (NASDAQ:LSCC), Pacira BioSciences, Inc. (NASDAQ:PCRX), and Warrior Met Coal, Inc. (NYSE:HCC). All of these stocks' market caps are closest to PVG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NBTB,6,7940,-3 LSCC,25,244673,3 PCRX,27,487640,2 HCC,35,479779,2 Average,23.25,305008,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $305 million. That figure was $85 million in PVG's case. Warrior Met Coal, Inc.(NYSE:HCC) is the most popular stock in this table. On the other hand NBT Bancorp Inc. (NASDAQ:NBTB) is the least popular one with only 6 bullish hedge fund positions. Pretium Resources Inc (NYSE:PVG) is not the least popular stock in this group but hedge fund interest is still below average. 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately PVG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PVG investors were disappointed as the stock returned -4.4% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.