All major U.S. stock indexes are trading down on Monday, on renewed fears of a global economic slowdown and a plummet in Chinese stocks. However, a few stocks, such as IAMGOLD Corp (USA) (NYSE:IAG), Barnes & Noble, Inc. (NYSE:BKS), American Capital Ltd. (NASDAQ:ACAS), Knowles Corp (NYSE:KN), and Stratasys, Ltd. (NASDAQ:SSYS) managed to retrieve some gains. So, let’s take a look at the events driving this growth and into the sentiment of the funds in our database.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Let’s start with IAMGOLD Corp (USA) (NYSE:IAG), which was up by about 8.8% on Monday afternoon. The stock, which lost 42.28% over 2015, started 2016 recuperating some of the lost ground as gold prices rose in Monday trading as concerns about a global economic slowdown and a tense situation in the Middle East injected uncertainty into investors around the globe.
As the stock declined during 2015, so did hedge fund interest. By the end of the third quarter of 2015, nine funds among those we track held long stakes in IAMGOLD Corp (USA) (NYSE:IAG), down from 16 a quarter earlier. However, those still betting on the company seem quite bullish. For instance, First Eagle Investment Management boosted its exposure by 22% to 8.04 million shares, while Jim Simons’ Renaissance Technologies upped its wage by 40% to over 5.27 million shares.
Barnes & Noble, Inc. (NYSE:BKS) is also up, by almost 5%, on Monday. In a recent article, Barron’s mentioned the stock among its income ideas for 2016. With a dividend of $0.15, Barnes & Noble’s stock sports a yield of around 6.52%, which makes the stock attractive for dividend investors.
Same as in the case cited above, hedge funds have been losing interest in Barnes & Noble, Inc. (NYSE:BKS) and the number of funds long the stock fell by almost 35% during the third quarter; among the funds we track, 23 disclosed long stakes in the company as of September 30. However, it seems like David Abrams’ Abrams Capital Management felt quite bullish on the stock; the fund boosted its exposure by 36% over the quarter, to 6.91 million shares, worth more than $83 million.