Should You Avoid Newmont Mining Corp (NEM)?

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Newmont Mining Corp (NYSE:NEM) was in 37 hedge funds' portfolio at the end of the first quarter of 2013. NEM investors should be aware of a decrease in enthusiasm from smart money recently. There were 44 hedge funds in our database with NEM holdings at the end of the previous quarter. To most stock holders, hedge funds are perceived as worthless, outdated investment tools of years past. While there are greater than 8000 funds in operation at present, we look at the leaders of this group, about 450 funds. It is estimated that this group controls most of the smart money's total asset base, and by keeping an eye on their best stock picks, we have identified a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here). Equally as beneficial, optimistic insider trading activity is another way to parse down the marketplace. As the old adage goes: there are a number of motivations for an insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here). Now, let's take a look at the key action regarding Newmont Mining Corp (NYSE:NEM).

How have hedgies been trading Newmont Mining Corp (NYSE:NEM)?

In preparation for this quarter, a total of 37 of the hedge funds we track were bullish in this stock, a change of -16% from the first quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings substantially. Newmont Mining Corp (NYSE:NEM)According to our comprehensive database, Jean-Marie Eveillard's First Eagle Investment Management had the most valuable position in Newmont Mining Corp (NYSE:NEM), worth close to $252.3 million, accounting for 0.8% of its total 13F portfolio. The second largest stake is held by Mario Gabelli of GAMCO Investors, with a $89 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include D. E. Shaw's D E Shaw, Gilchrist Berg's Water Street Capital and Martin Whitman's Third Avenue Management. Judging by the fact that Newmont Mining Corp (NYSE:NEM) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there were a few money managers that slashed their positions entirely at the end of the first quarter. It's worth mentioning that Robert Pitts's Steadfast Capital Management cut the largest position of all the hedgies we monitor, totaling an estimated $59.8 million in call options, and Robert Pitts of Steadfast Capital Management was right behind this move, as the fund dumped about $29.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 7 funds at the end of the first quarter.

Insider trading activity in Newmont Mining Corp (NYSE:NEM)

Bullish insider trading is at its handiest when the company in focus has seen transactions within the past half-year. Over the last half-year time frame, Newmont Mining Corp (NYSE:NEM) has seen 1 unique insiders purchasing, and 11 insider sales (see the details of insider trades here). Let's check out hedge fund and insider activity in other stocks similar to Newmont Mining Corp (NYSE:NEM). These stocks are AngloGold Ashanti Limited (ADR) (NYSE:AU), Kinross Gold Corporation (USA) (NYSE:KGC), Yamana Gold Inc. (USA) (NYSE:AUY), Barrick Gold Corporation (USA) (NYSE:ABX), and Goldcorp Inc. (USA) (NYSE:GG). This group of stocks belong to the gold industry and their market caps are similar to NEM's market cap.
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