Is Gold Fields Limited (ADR) (NYSE:GFI) the right investment to pursue these days? Investors who are in the know are getting less optimistic. The number of long hedge fund bets went down by 3 in recent months.
In the eyes of most investors, hedge funds are perceived as worthless, old financial tools of years past. While there are over 8000 funds trading at present, we at Insider Monkey choose to focus on the aristocrats of this club, about 450 funds. It is widely believed that this group oversees the lion's share of the smart money's total capital, and by monitoring their highest performing investments, we have unearthed a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 25 percentage points in 6.5 month (see the details here).
Just as beneficial, optimistic insider trading sentiment is a second way to break down the marketplace. There are lots of reasons for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this tactic if piggybackers know what to do (learn more here).
Consequently, we're going to take a look at the recent action regarding Gold Fields Limited (ADR) (NYSE:GFI).
Heading into 2013, a total of 16 of the hedge funds we track held long positions in this stock, a change of -16% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes meaningfully.
According to our comprehensive database, Jean-Marie Eveillard's First Eagle Investment Management had the most valuable position in Gold Fields Limited (ADR) (NYSE:GFI), worth close to $590 million, comprising 2.1% of its total 13F portfolio. Coming in second is Paulson & Co, managed by John Paulson, which held a $82 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Jim Simons's Renaissance Technologies, John Burbank's Passport Capital and Cliff Asness's AQR Capital Management.
Judging by the fact that Gold Fields Limited (ADR) (NYSE:GFI) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there exists a select few money managers who were dropping their entire stakes at the end of the year. Intriguingly, Jeffrey Vinik's Vinik Asset Management sold off the largest investment of the "upper crust" of funds we monitor, totaling an estimated $22 million in stock.. Israel Englander's fund, Millennium Management, also dropped its stock, about $15 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds at the end of the year.
Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last half-year time frame, Gold Fields Limited (ADR) (NYSE:GFI) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the returns exhibited by Insider Monkey's research, retail investors must always watch hedge fund and insider trading sentiment, and Gold Fields Limited (ADR) (NYSE:GFI) applies perfectly to this mantra.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.