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Pan American Silver Corp. (USA) (NASDAQ:PAAS): Insiders Are Dumping, Should You?

Is Pan American Silver Corp. (USA) (NASDAQ:PAAS) the right investment to pursue these days? Hedge funds are becoming less confident. The number of bullish hedge fund positions were trimmed by 3 lately.

Pan American Silver Corp. (USA) (NASDAQ:PAAS)

According to most investors, hedge funds are viewed as worthless, old investment tools of the past. While there are over 8000 funds trading at present, we at Insider Monkey choose to focus on the masters of this club, about 450 funds. It is estimated that this group oversees most of the smart money’s total asset base, and by watching their top picks, we have come up with a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Just as important, bullish insider trading activity is a second way to break down the world of equities. As the old adage goes: there are a number of reasons for an insider to get rid of shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this method if shareholders understand where to look (learn more here).

Consequently, let’s take a peek at the latest action regarding Pan American Silver Corp. (USA) (NASDAQ:PAAS).

What have hedge funds been doing with Pan American Silver Corp. (USA) (NASDAQ:PAAS)?

In preparation for this year, a total of 15 of the hedge funds we track were bullish in this stock, a change of -17% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Pan American Silver Corp. (USA) (NASDAQ:PAAS), worth close to $209 million, accounting for 0.7% of its total 13F portfolio. Sitting at the No. 2 spot is David Dreman of Dreman Value Management, with a $26 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Eric Sprott’s Sprott Asset Management, Trey Reik’s Bristol Investment Partners and Jim Simons’s Renaissance Technologies.

Since Pan American Silver Corp. (USA) (NASDAQ:PAAS) has experienced a declination in interest from the smart money, it’s easy to see that there exists a select few hedge funds who sold off their full holdings last quarter. Interestingly, Mark Travis’s Intrepid Capital Management dropped the biggest stake of the “upper crust” of funds we watch, worth an estimated $26 million in stock., and Peter J. Eichler Jr. of Aletheia Research and Management was right behind this move, as the fund dumped about $26 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds last quarter.

What have insiders been doing with Pan American Silver Corp. (USA) (NASDAQ:PAAS)?

Insider buying is at its handiest when the company in question has experienced transactions within the past six months. Over the last six-month time period, Pan American Silver Corp. (USA) (NASDAQ:PAAS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the returns exhibited by our research, retail investors must always pay attention to hedge fund and insider trading activity, and Pan American Silver Corp. (USA) (NASDAQ:PAAS) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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.

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