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Eldorado Gold Corp (USA) (NYSE:EGO): Hedge Funds and Insiders Are Bearish, What Should You Do?

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Is Eldorado Gold Corp (USA) (NYSE:EGO) worth your attention right now? Money managers are reducing their bets on the stock. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience

If you’d ask most stock holders, hedge funds are seen as worthless, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, we choose to focus on the leaders of this group, close to 450 funds. It is estimated that this group has its hands on the majority of the hedge fund industry’s total capital, and by keeping an eye on their top picks, we have identified a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as beneficial, positive insider trading activity is another way to break down the financial markets. Just as you’d expect, there are a number of stimuli for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this tactic if piggybackers understand what to do (learn more here).

Keeping this in mind, it’s important to take a gander at the key action surrounding Eldorado Gold Corp (USA) (NYSE:EGO).

What does the smart money think about Eldorado Gold Corp (USA) (NYSE:EGO)?

In preparation for this quarter, a total of 19 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings considerably.

Eldorado Gold Corp (USA) (NYSE:EGO)According to our comprehensive database, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the most valuable position in Eldorado Gold Corp (USA) (NYSE:EGO). First Eagle Investment Management has a $46.6 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $13.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Michael Hintze’s CQS Cayman LP.

Judging by the fact that Eldorado Gold Corp (USA) (NYSE:EGO) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few money managers that slashed their entire stakes heading into Q2. Interestingly, Sander Gerber’s Hudson Bay Capital Management sold off the biggest position of all the hedgies we watch, totaling close to $0.6 million in stock., and Sander Gerber of Hudson Bay Capital Management was right behind this move, as the fund said goodbye to about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Eldorado Gold Corp (USA) (NYSE:EGO)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has seen transactions within the past six months. Over the latest six-month time frame, Eldorado Gold Corp (USA) (NYSE:EGO) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Eldorado Gold Corp (USA) (NYSE:EGO). These stocks are Gold Fields Limited (ADR) (NYSE:GFI), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Franco-Nevada Corporation (NYSE:FNV), Compania de Minas Buenaventura SA (ADR) (NYSE:BVN), and Agnico-Eagle Mines Limited (USA) (NYSE:AEM). This group of stocks are in the gold industry and their market caps match EGO’s market cap.

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