AngloGold Ashanti Limited (ADR) (AU): Hendge Funds Are Buying, Should You?

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about AngloGold Ashanti Limited (ADR) (NYSE:AU) in this article.

AngloGold Ashanti Limited (ADR) (NYSE:AU) was in 15 hedge funds’ portfolios at the end of September. AngloGold Ashanti Limited (ADR) (NYSE:AU) has seen a decrease in hedge fund sentiment of late. There were 18 hedge funds in our database with AngloGold Ashanti Limited (ADR) (NYSE:AU) holdings at the end of the previous quarter. At the end of this article, we will also compare AngloGold Ashanti Limited (ADR) (NYSE:AU) to other stocks, including American Capital Ltd. (NASDAQ:ACAS), RLJ Lodging Trust (NYSE:RLJ), and Webster Financial Corporation (NYSE:WBS) to get a better sense of its popularity.

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In the eyes of most traders, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, We choose to focus on the crème de la crème of this club, approximately 700 funds. These money managers shepherd most of the smart money’s total capital, and by shadowing their highest performing equity investments, Insider Monkey has unearthed a few investment strategies that have historically beaten the broader indices. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, we’re going to take a glance at the recent action encompassing AngloGold Ashanti Limited (ADR) (NYSE:AU).

How have hedgies been trading AngloGold Ashanti Limited (ADR) (NYSE:AU)?

Heading into Q4, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 17% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, John Paulson’s Paulson & Co has the number one position in AngloGold Ashanti Limited (ADR) (NYSE:AU), worth close to $205 million, corresponding to 1.1% of its total 13F portfolio. On Paulson & Co’s heels is Passport Capital, managed by John Burbank, which holds a $44 million position; the fund has 0.8% of its 13F portfolio invested in the stock. The remaining members of the smart money that are bullish contain Renaissance Technologies, Howard Marks’ Oaktree Capital Management, and Israel Englander’s Millennium Management.

Since AngloGold Ashanti Limited (ADR) (NYSE:AU) has witnessed a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their positions entirely last quarter. At the top of the heap, Malcolm Fairbairn’s Ascend Capital said goodbye to the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $3.8 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund dropped about $1.9 million worth of shares. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to AngloGold Ashanti Limited (ADR) (NYSE:AU). We will take a look at American Capital Ltd. (NASDAQ:ACAS), RLJ Lodging Trust (NYSE:RLJ), Webster Financial Corporation (NYSE:WBS), and Portland General Electric Company (NYSE:POR). This group of stocks’ market valuations resembles AngloGold Ashanti Limited (ADR) (NYSE:AU)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACAS 36 1095174 -2
RLJ 9 116093 -3
WBS 25 453351 2
POR 13 159206 -2

As you can see, these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $456 million. That figure was $495 million in AngloGold Ashanti Limited (ADR) (NYSE:AU)’s case. American Capital Ltd. (NASDAQ:ACAS) is the most popular stock in this table. On the other hand, RLJ Lodging Trust (NYSE:RLJ) is the least popular one with only 9 bullish hedge fund positions. AngloGold Ashanti Limited (ADR) (NYSE:AU) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, American Capital Ltd. (NASDAQ:ACAS) might be a better candidate to consider a long position.