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Hedge Funds, Market Bearish On NovaGold Resources Inc. (USA) (NG) As It Posts Expected Earnings

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Shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) fell 8.19% yesterday due to weak market sentiment, even before the gold miner reported its second quarter financial results after the market closed. The Canadian company posted a net loss of $9.2 million for the quarter, which was lower than its loss of $10.7 million year-over-year. For the second quarter, loss per diluted share was $0.03, equaling the loss per share in the same quarter a year ago as well. Analysts on Wall Street were expecting the same loss per share of $0.03 for the mineral company.  At the end of the company’s fiscal second quarter, which ended on May 31, 2015, it had $135 million in available cash and terms deposits, along with total assets worth $464.82 million. NovaGold Resources Inc. (USA) (NYSEMKT:NG) reported steady growth in its Donlin Gold project, with the preparation of the preliminary draft EIS in accordance with relevant agencies. The gold miner added, “The release of the preliminary draft EIS is a major step in the process leading to publication of the draft EIS for public comment. The Donlin Gold EIS represents a very thorough and thoughtful analysis of the project.” It is important to consider that the project is among one of the largest undeveloped gold deposits in the world, with estimated gold reserves of 33.8 million ounces.


Despite the pessimistic dip yesterday, shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) have grown by 10.5% year-to-date and are up by 4.14% in morning trading. Nonetheless, the smart money has been slightly bearish on the stock of the gold and copper mineral explorer company of late, as only 14 hedge funds maintained positions in NovaGold with total holdings of $218.19 million on March 31, compared to $221.93 million in shares held by 15 investors at the end of 2014. As shares were essentially flat in the first quarter, it did not impact the small decrease in the value of holdings of the top money managers.

We don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 135%, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

Insider activity within a company indicates the future development and confidence that insiders have in its direction. During the past six months, the only insider activity concerning NovaGold Resources Inc. (USA) (NYSEMKT:NG) involved the sale of 20,016 shares in two transactions by Director Gillyeard Leathley.

With all of this in mind, we’re going to take a look at the recent hedge fund action surrounding NovaGold Resources Inc. (USA) (NYSEAMEX:NG).

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