- Oops!Something went wrong.Please try again later.
In this article you are going to find out whether hedge funds think SilverCrest Metals Inc. (NYSE:SILV) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
SilverCrest Metals Inc. (NYSE:SILV) was in 9 hedge funds' portfolios at the end of the first quarter of 2020. SILV investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. There were 11 hedge funds in our database with SILV positions at the end of the previous quarter. Our calculations also showed that SILV isn't among the 30 most popular stocks among hedge funds (click for Q1 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 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 S&P 500 ETFs by 58 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 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.
[caption id="attachment_673972" align="aligncenter" width="392"]
Blair Levinsky of Waratah Capital Advisors[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, We take a look at lists like the top 15 defense contractors in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the recent hedge fund action encompassing SilverCrest Metals Inc. (NYSE:SILV).
Hedge fund activity in SilverCrest Metals Inc. (NYSE:SILV)
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SILV over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Sprott Asset Management, managed by Eric Sprott, holds the number one position in SilverCrest Metals Inc. (NYSE:SILV). Sprott Asset Management has a $22.2 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Waratah Capital Advisors, led by Brad Dunkley and Blair Levinsky, holding a $9.2 million position; 1.6% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include John Overdeck and David Siegel's Two Sigma Advisors, Paul Marshall and Ian Wace's Marshall Wace LLP and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to SilverCrest Metals Inc. (NYSE:SILV), around 2.03% of its 13F portfolio. Waratah Capital Advisors is also relatively very bullish on the stock, dishing out 1.63 percent of its 13F equity portfolio to SILV.
Since SilverCrest Metals Inc. (NYSE:SILV) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of funds who sold off their full holdings heading into Q4. It's worth mentioning that Israel Englander's Millennium Management dropped the biggest investment of the 750 funds watched by Insider Monkey, totaling about $1.7 million in stock. Noam Gottesman's fund, GLG Partners, also dropped its stock, about $0.1 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds heading into Q4.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as SilverCrest Metals Inc. (NYSE:SILV) but similarly valued. We will take a look at Repay Holdings Corporation (NASDAQ:RPAY), The York Water Company (NASDAQ:YORW), Sonic Automotive Inc (NYSE:SAH), and Community Trust Bancorp, Inc. (NASDAQ:CTBI). This group of stocks' market caps are closest to SILV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RPAY,8,112989,-4 YORW,11,25816,3 SAH,14,17995,-2 CTBI,6,13575,0 Average,9.75,42594,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $34 million in SILV's case. Sonic Automotive Inc (NYSE:SAH) is the most popular stock in this table. On the other hand Community Trust Bancorp, Inc. (NASDAQ:CTBI) is the least popular one with only 6 bullish hedge fund positions. SilverCrest Metals Inc. (NYSE:SILV) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on SILV as the stock returned 64.4% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.