Is Fortuna Silver Mines Inc. (NYSE:FSM) the right investment to pursue these days? The best stock pickers are turning bullish. The number of bullish hedge fund bets improved by 2 recently.
According to most traders, hedge funds are viewed as worthless, outdated investment tools of the past. While there are more than 8000 funds trading at present, we hone in on the aristocrats of this club, around 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by monitoring their highest performing investments, we have unearthed a number of investment strategies that have historically outstripped Mr. 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 trumped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as beneficial, bullish insider trading activity is a second way to parse down the marketplace. There are many reasons for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this method if shareholders understand where to look (learn more here).
With all of this in mind, we’re going to take a glance at the recent action encompassing Fortuna Silver Mines Inc. (NYSE:FSM).
What have hedge funds been doing with Fortuna Silver Mines Inc. (NYSE:FSM)?
At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of 50% from the third quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully.
Of the funds we track, Eric Sprott’s Sprott Asset Management had the largest position in Fortuna Silver Mines Inc. (NYSE:FSM), worth close to $36.4 million, comprising 4.3% of its total 13F portfolio. The second largest stake is held by Michael Hintze of CQS Cayman LP, with a $3.6 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include D. E. Shaw’s D E Shaw, Steven Cohen’s SAC Capital Advisors and Charles Davidson’s Wexford Capital.
As aggregate interest increased, key money managers were leading the bulls’ herd. SAC Capital Advisors, managed by Steven Cohen, assembled the most valuable position in Fortuna Silver Mines Inc. (NYSE:FSM). SAC Capital Advisors had 0.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.1 million investment in the stock during the quarter. The following funds were also among the new FSM investors: Glenn Russell Dubin’s Highbridge Capital Management and Ken Griffin’s Citadel Investment Group.
How are insiders trading Fortuna Silver Mines Inc. (NYSE:FSM)?
Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last six-month time frame, Fortuna Silver Mines Inc. (NYSE:FSM) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Fortuna Silver Mines Inc. (NYSE:FSM). These stocks are Silvercorp Metals Inc. (USA) (NYSE:SVM), Endeavour Silver Corp. (CAN) (NYSE:EXK), Mag Silver Corp (USA) (NYSEAMEX:MVG), Great Panther Silver Ltd (USA) (NYSEAMEX:GPL), and Mines Management, Inc. (NYSEAMEX:MGN). All of these stocks are in the silver industry and their market caps resemble FSM’s market cap.