Should You Buy Shares of Nevsun Resources (NSU)?

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions either. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Nevsun Resources (USA) (NYSEAMEX:NSU) but similarly valued. These stocks are Sequential Brands Group Inc (NASDAQ:SQBG), CONE Midstream Partners LP (NYSE:CNNX), Flushing Financial Corporation (NASDAQ:FFIC), and M/I Homes Inc (NYSE:MHO). All of these stocks’ market caps match NSU’s market cap.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $39 million, versus $19 million in NSU’s case. M/I Homes Inc (NYSE:MHO) is the most popular stock in this table, while CONE Midstream Partners LP (NYSE:CNNX) is the least popular one. Even though Nevsun Resources (USA) (NYSEAMEX:NSU) is not the most popular stock in this group, it enjoys a hedge fund interest above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MHO might be a better candidate to consider a long position.