While the broader market has delivered rather tepid returns so far in 2016, there have been some stocks, like always, that have outperformed the benchmarks by a wide margin. By saying wide margin, we are not referring to stocks that are just a few extra percentage points above the benchmarks, but of stocks that have produced multi-fold, triple-digit returns. Unsurprisingly, most of the stocks that have achieved that feat in 2016 are those that started the year in the penny stock category (were trading at less than $1 per share) at the beginning of the year.
In this article, we’ll talk about five such penny stocks that have performed amazingly well this year and will also discuss what the hedge funds tracked by Insider Monkey thought about these stocks entering the second-half of 2016.
We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details).
#5 Great Panther Silver Ltd (NYSEMKT:GPL)
– Hedge Funds With Long Positions (as of June 30): 2
– Value of Hedge Funds’ Holdings (as of June 30): $4.63 Million
Let’s start with Great Panther Silver Ltd (NYSEMKT:GPL), shares of which were owned by two of the hedge funds in our system on June 30. Those funds enjoyed a strong second quarter for the stock, as the aggregate value of their holdings in it saw an increase of almost 65%, almost the same as the stock’s returns during the quarter. While shares of the silver mining firm have lost more than 26% of their value in the last six months, they are still trading up by 163.37% year-to-date. The company recently reported a 12% year-over-year decrease in quarterly silver production for the third quarter. Nevertheless, most analysts continue to remain bullish on the stock, citing Great Panther Silver Ltd (NYSEMKT:GPL)’s strong balance sheet and its conviction towards meeting its 2016 production guidance.
#4 Vista Gold Corp. (NYSEMKT:VGZ)
– Hedge Funds With Long Positions (as of June 30): 3
– Value of Hedge Funds’ Holdings (as of June 30): $29.53 Million
Vista Gold Corp. (NYSEMKT:VGZ)’s stock is up by 190.15% year-to-date despite losing more than half of its value since the start of the second-half of 2016. The number of hedge funds in our database that owned a stake in the company remained the same during the second quarter at three, while the aggregate value of their holdings in it jumped by over 400% during that time. On October 26, the Colorado-based gold mining company reported its third quarter results, declaring a net loss of $2.08 million for the period, which translates into a loss of $0.02 per share. For the same quarter of the previous year, Vista Gold Corp. (NYSEMKT:VGZ) had reported net income of $536,00, or $0.01 per share.
We’ll check out three more top performing penny stocks on the next page.
#3 Harmony Gold Mining Co. (ADR) (NYSE:HMY)
– Hedge Funds With Long Positions (as of June 30): 11
– Value of Hedge Funds’ Holdings (as of June 30): $50.38 Million
Among the five stocks covered in this article, Harmony Gold Mining Co. (ADR) (NYSE:HMY) was owned by the most hedge funds among those that we track at the end of June. However, the aggregate value of their holdings in the stock declined by more than 80% during the second quarter, despite the stock being nearly flat. Some hedge funds showed some signs of bullishness though, as Matthew Tewksbury’s Stevens Capital Management and Louis Navellier‘s Navellier & Associates initiated stakes in the company during the quarter. Like Vista Gold, shares of Harmony Gold Mining Co. (ADR) (NYSE:HMY) have also registered solid gains this year on the back of the rally in gold prices and are currently trading up by 230.08% year-to-date. On October 17, the company revealed that it achieved a 10% quarter-over-quarter increase in gold production during the third quarter. However, analysts at Citigroup continued to remain bearish on the stock despite that positive development, reiterating their ‘Sell’ rating on it on October 18.
#2 China Commercial Credit Inc (NASDAQ:CCCR)
– Hedge Funds With Long Positions (as of June 30): 0
– Value of Hedge Funds’ Holdings (as of June 30): 0
Moving on, none of the hedge funds tracked by Insider Monkey reported owning a stake in China Commercial Credit Inc (NASDAQ:CCCR) as of the end of the first or second quarters of 2016. They have missed out on great returns, as the shares of the Chinese financial services firm have witnessed a greater than four-fold increase this year. China Commercial Credit Inc (NASDAQ:CCCR) is engaged in the business of providing loans and loan guarantees to small-to-medium-sized enterprises, farmers and individuals in the Chinese mainland. The company was listed on Nasdaq in August 2013, pricing its offering at $6.50 per share and raising $8.90 million in proceeds. Despite the four-fold increase its stock has enjoyed this year, it is still trading down by more than 70% since its listing.
#1 Alexco Resource Corp. (USA) (NYSEMKT:AXU)
– Hedge Funds With Long Positions (as of June 30): 3
– Value of Hedge Funds’ Holdings (as of June 30): $3.58 Million
While the number of hedge funds that we track which were long Alexco Resource Corp. (USA) (NYSEMKT:AXU) remained unchanged over the second quarter, the aggregate value of their holdings in it jumped by over 330%. One of the major reasons for the hefty increase in the aggregate value of hedge funds’ holdings in the company was the bullishness of billionaire investors Jim Simons (Renaissance Technologies) and Ken Griffin (Citadel Investment Group), which increased their stakes in Alexco Resource Corp. (USA) (NYSEMKT:AXU) by 29% and 159%, respectively. Shares of the Canada-based silver mining company are currently trading up by 404.32% year-to-date. However, even accounting for those gains, the shares have lost more than 75% of their value in the last five years. Last month, analysts at Canaccord Genuity upgraded the stock to ‘Buy’ from ‘Hold’.