Did Hedge Funds Drop The Ball On Pan American Silver Corp. (PAAS) ?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Pan American Silver Corp. (NASDAQ:PAAS).

Pan American Silver Corp. (NASDAQ:PAAS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds’ portfolios at the end of June. At the end of this article we will also compare PAAS to other stocks including Immunomedics, Inc. (NASDAQ:IMMU), Cedar Fair, L.P. (NYSE:FUN), and Quaker Chemical Corp (NYSE:KWR) to get a better sense of its popularity. Our calculations also showed that PAAS isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the latest hedge fund action surrounding Pan American Silver Corp. (NASDAQ:PAAS).

Hedge fund activity in Pan American Silver Corp. (NASDAQ:PAAS)

At Q2’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PAAS over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


Among these funds, Renaissance Technologies held the most valuable stake in Pan American Silver Corp. (NASDAQ:PAAS), which was worth $113.7 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $28.8 million worth of shares. Moreover, Slate Path Capital, Millennium Management, and Sprott Asset Management were also bullish on Pan American Silver Corp. (NASDAQ:PAAS), allocating a large percentage of their portfolios to this stock.

Since Pan American Silver Corp. (NASDAQ:PAAS) has witnessed a decline in interest from the smart money, it’s easy to see that there were a few hedgies who were dropping their positions entirely by the end of the second quarter. It’s worth mentioning that Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, totaling close to $17.6 million in stock. William Harnisch’s fund, Peconic Partners LLC, also sold off its stock, about $4.2 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Pan American Silver Corp. (NASDAQ:PAAS) but similarly valued. These stocks are Immunomedics, Inc. (NASDAQ:IMMU), Cedar Fair, L.P. (NYSE:FUN), Quaker Chemical Corp (NYSE:KWR), and Stantec Inc. (NYSE:STN). This group of stocks’ market caps are similar to PAAS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IMMU 21 618087 -3
FUN 8 46860 0
KWR 13 150464 2
STN 6 71062 1
Average 12 221618 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $235 million in PAAS’s case. Immunomedics, Inc. (NASDAQ:IMMU) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 6 bullish hedge fund positions. Pan American Silver Corp. (NASDAQ:PAAS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on PAAS as the stock returned 21.7% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.