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In this article we are going to use hedge fund sentiment as a tool and determine whether Eldorado Gold Corp (NYSE:EGO) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Eldorado Gold Corp (NYSE:EGO) investors should pay attention to an increase in hedge fund interest recently. Eldorado Gold Corp (NYSE:EGO) was in 15 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. There were 12 hedge funds in our database with EGO positions at the end of the second quarter. Our calculations also showed that EGO 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.
In today’s marketplace there are numerous signals market participants can use to grade their holdings. A duo of the best signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outpace the broader indices by a healthy margin (see the details here).
Michael Gelband of ExodusPoint Capital
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. Keeping this in mind we're going to review the latest hedge fund action regarding Eldorado Gold Corp (NYSE:EGO).
Do Hedge Funds Think EGO Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the second quarter of 2020. By comparison, 13 hedge funds held shares or bullish call options in EGO a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the biggest position in Eldorado Gold Corp (NYSE:EGO). Renaissance Technologies has a $76.8 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Lansdowne Partners, managed by Alex Snow, which holds a $62.1 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Remaining 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 D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Lansdowne Partners allocated the biggest weight to Eldorado Gold Corp (NYSE:EGO), around 2.5% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, designating 0.35 percent of its 13F equity portfolio to EGO.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. AlphaCrest Capital Management, managed by Mika Toikka, established the most outsized position in Eldorado Gold Corp (NYSE:EGO). AlphaCrest Capital Management had $0.4 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $0.3 million investment in the stock during the quarter. The other funds with brand new EGO positions are Minhua Zhang's Weld Capital Management and Noam Gottesman's GLG Partners.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Eldorado Gold Corp (NYSE:EGO) but similarly valued. We will take a look at Avis Budget Group Inc. (NASDAQ:CAR), ServisFirst Bancshares, Inc. (NASDAQ:SFBS), Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL), Sanmina Corporation (NASDAQ:SANM), Rogers Corporation (NYSE:ROG), Prestige Consumer Healthcare Inc. (NYSE:PBH), and GrafTech International Ltd. (NYSE:EAF). This group of stocks' market valuations are similar to EGO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CAR,34,835613,13 SFBS,8,6464,-1 MDGL,15,507679,0 SANM,15,135028,-5 ROG,19,94135,6 PBH,17,110462,-3 EAF,26,145437,2 Average,19.1,262117,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $262 million. That figure was $232 million in EGO's case. Avis Budget Group Inc. (NASDAQ:CAR) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is the least popular one with only 8 bullish hedge fund positions. Eldorado Gold Corp (NYSE:EGO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EGO is 44. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on EGO as the stock returned 17.8% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.