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Did Hedge Funds Make The Right Call On Alamos Gold Inc (AGI) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Alamos Gold Inc (NYSE:AGI) based on that data and determine whether they were really smart about the stock.

Alamos Gold Inc (NYSE:AGI) investors should be aware of an increase in enthusiasm from smart money in recent months. Our calculations also showed that AGI 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.

To most investors, hedge funds are seen as underperforming, old investment vehicles of years past. While there are greater than 8000 funds in operation at the moment, Our researchers choose to focus on the masters of this group, about 850 funds. It is estimated that this group of investors administer the lion’s share of the hedge fund industry’s total asset base, and by tailing their top picks, Insider Monkey has unearthed numerous investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to take a peek at the new hedge fund action regarding Alamos Gold Inc (NYSE:AGI).

What have hedge funds been doing with Alamos Gold Inc (NYSE:AGI)?

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in AGI over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Alamos Gold Inc (NYSE:AGI), with a stake worth $66 million reported as of the end of September. Trailing Renaissance Technologies was Sprott Asset Management, which amassed a stake valued at $52.7 million. Sun Valley Gold, Arrowstreet Capital, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Alamos Gold Inc (NYSE:AGI), around 4.83% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, setting aside 2.51 percent of its 13F equity portfolio to AGI.

As one would reasonably expect, some big names were leading the bulls’ herd. Lansdowne Partners, managed by Alex Snow, created the biggest position in Alamos Gold Inc (NYSE:AGI). Lansdowne Partners had $5.5 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.5 million position during the quarter. The following funds were also among the new AGI investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Noam Gottesman’s GLG Partners, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Alamos Gold Inc (NYSE:AGI) but similarly valued. We will take a look at Washington Real Estate Investment Trust (NYSE:WRE), Synaptics Incorporated (NASDAQ:SYNA), Coca-Cola Consolidated Inc. (NASDAQ:COKE), and Principia Biopharma Inc. (NASDAQ:PRNB). This group of stocks’ market valuations resemble AGI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WRE 5 90460 -4
SYNA 26 345715 0
COKE 9 14446 -2
PRNB 21 734674 1
Average 15.25 296324 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $296 million. That figure was $234 million in AGI’s case. Synaptics Incorporated (NASDAQ:SYNA) is the most popular stock in this table. On the other hand Washington Real Estate Investment Trust (NYSE:WRE) is the least popular one with only 5 bullish hedge fund positions. Alamos Gold Inc (NYSE:AGI) is not the most popular stock in this group but hedge fund interest is still above average. 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 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on AGI as the stock returned 129% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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