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Did Hedge Funds Make The Right Call On Agnico Eagle Mines Limited (AEM) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Agnico Eagle Mines Limited (NYSE:AEM) and determine whether the smart money was really smart about this stock.

Agnico Eagle Mines Limited (NYSE:AEM) was in 25 hedge funds’ portfolios at the end of the first quarter of 2020. AEM investors should pay attention to a decrease in hedge fund sentiment of late. There were 34 hedge funds in our database with AEM holdings at the end of the previous quarter. Our calculations also showed that AEM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are many indicators stock market investors employ to evaluate their stock investments. Two of the most innovative indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outpace their index-focused peers by a significant amount (see the details here).

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At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind we’re going to check out the new hedge fund action surrounding Agnico Eagle Mines Limited (NYSE:AEM).

How have hedgies been trading Agnico Eagle Mines Limited (NYSE:AEM)?

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AEM over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AEM A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey,  Renaissance Technologies has the largest position in Agnico Eagle Mines Limited (NYSE:AEM), worth close to $162.5 million, amounting to 0.2% of its total 13F portfolio. Coming in second is Eric Sprott of Sprott Asset Management, with a $48.6 million position; 4.5% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Agnico Eagle Mines Limited (NYSE:AEM), around 4.45% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, designating 2.77 percent of its 13F equity portfolio to AEM.

Since Agnico Eagle Mines Limited (NYSE:AEM) has experienced bearish sentiment from the smart money, we can see that there exists a select few money managers who sold off their full holdings heading into Q4. Interestingly, Stanley Druckenmiller’s Duquesne Capital cut the biggest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $46.1 million in stock. John Paulson’s fund, Paulson & Co, also cut its stock, about $37.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 9 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Agnico Eagle Mines Limited (NYSE:AEM) but similarly valued. These stocks are W.R. Berkley Corporation (NYSE:WRB), NiSource Inc. (NYSE:NI), DaVita Inc (NYSE:DVA), and Masimo Corporation (NASDAQ:MASI). This group of stocks’ market caps are similar to AEM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WRB 26 208286 -8
NI 27 641894 -1
DVA 43 3657786 5
MASI 31 156950 1
Average 31.75 1166229 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $1166 million. That figure was $392 million in AEM’s case. DaVita Inc (NYSE:DVA) is the most popular stock in this table. On the other hand W.R. Berkley Corporation (NYSE:WRB) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Agnico Eagle Mines Limited (NYSE:AEM) is even less popular than WRB. Hedge funds clearly dropped the ball on AEM as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on AEM as the stock returned 61.5% in the second quarter and outperformed the market by an even larger margin.

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