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Did Hedge Funds Make The Right Call On Sibanye Stillwater Limited (SBSW) ?

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 Sibanye Stillwater Limited (NYSE:SBSW) based on that data and determine whether they were really smart about the stock.

Sibanye Stillwater Limited (NYSE:SBSW) has seen an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that SBSW 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America 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 look at the fresh hedge fund action surrounding Sibanye Stillwater Limited (NYSE:SBSW).

What does smart money think about Sibanye Stillwater Limited (NYSE:SBSW)?

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 46% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SBSW over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Sibanye Stillwater Limited (NYSE:SBSW), with a stake worth $29.5 million reported as of the end of September. Trailing Renaissance Technologies was GLG Partners, which amassed a stake valued at $18.2 million. Encompass Capital Advisors, Maple Rock Capital, and Arrowstreet Capital 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 Maple Rock Capital allocated the biggest weight to Sibanye Stillwater Limited (NYSE:SBSW), around 1.69% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, dishing out 1.46 percent of its 13F equity portfolio to SBSW.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Encompass Capital Advisors, managed by Todd J. Kantor, established the most valuable position in Sibanye Stillwater Limited (NYSE:SBSW). Encompass Capital Advisors had $13.6 million invested in the company at the end of the quarter. Len Kipp and Xavier Majic’s Maple Rock Capital also initiated a $6.6 million position during the quarter. The other funds with brand new SBSW positions are Eric Sprott’s Sprott Asset Management, Paul Tudor Jones’s Tudor Investment Corp, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sibanye Stillwater Limited (NYSE:SBSW) but similarly valued. These stocks are Blueprint Medicines Corporation (NASDAQ:BPMC), Western Alliance Bancorporation (NYSE:WAL), Darling Ingredients Inc. (NYSE:DAR), and Glacier Bancorp, Inc. (NASDAQ:GBCI). All of these stocks’ market caps are closest to SBSW’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BPMC 36 762086 -1
WAL 27 137471 -5
DAR 25 255260 9
GBCI 12 36299 -1
Average 25 297779 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $84 million in SBSW’s case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Glacier Bancorp, Inc. (NASDAQ:GBCI) is the least popular one with only 12 bullish hedge fund positions. Sibanye Stillwater Limited (NYSE:SBSW) is not the least popular stock in this group but hedge fund interest is still below 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 and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on SBSW as the stock returned 162.7% since the end of March and outperformed the market by an even larger margin.

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