Do Hedge Funds Love Golden Star Resources Ltd. (GSS)?

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 have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Golden Star Resources Ltd. (NYSE:GSS) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Golden Star Resources Ltd. (NYSE:GSS) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. Golden Star Resources Ltd. (NYSE:GSS) was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 9. There were 8 hedge funds in our database with GSS positions at the end of the second quarter. Our calculations also showed that GSS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

In the 21st century investor’s toolkit there are numerous metrics market participants can use to evaluate publicly traded companies. A couple of the most under-the-radar metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outclass the broader indices by a healthy margin (see the details here).

Eric Sprott Sprott Asset Management

Eric Sprott of Sprott Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to check out the recent hedge fund action surrounding Golden Star Resources Ltd. (NYSE:GSS).

Hedge fund activity in Golden Star Resources Ltd. (NYSE:GSS)

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in GSS over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the biggest position in Golden Star Resources Ltd. (NYSE:GSS). Renaissance Technologies has a $16.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $3.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of Eric Sprott’s Sprott Asset Management, Ken Griffin’s Citadel Investment Group and Greg Eisner’s Engineers Gate Manager. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Golden Star Resources Ltd. (NYSE:GSS), around 0.06% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to GSS.

Seeing as Golden Star Resources Ltd. (NYSE:GSS) has witnessed falling interest from the smart money, we can see that there was a specific group of hedge funds who sold off their positions entirely by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, comprising close to $0.4 million in stock, and Nick Thakore’s Diametric Capital was right behind this move, as the fund cut about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Golden Star Resources Ltd. (NYSE:GSS). We will take a look at Myers Industries, Inc. (NYSE:MYE), Shoe Carnival, Inc. (NASDAQ:SCVL), Dynavax Technologies Corporation (NASDAQ:DVAX), HarborOne Bancorp, Inc. (NASDAQ:HONE), Talos Energy, Inc. (NYSE:TALO), Ardelyx Inc (NASDAQ:ARDX), and Navigator Holdings Ltd (NYSE:NVGS). This group of stocks’ market values match GSS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MYE 12 80684 1
SCVL 19 49764 8
DVAX 23 58102 6
HONE 14 26950 1
TALO 8 18051 -6
ARDX 21 180194 -3
NVGS 16 30119 2
Average 16.1 63409 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $23 million in GSS’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand Talos Energy, Inc. (NYSE:TALO) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Golden Star Resources Ltd. (NYSE:GSS) is even less popular than TALO. Our overall hedge fund sentiment score for GSS is 23. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards GSS. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th but managed to beat the market again by 16.1 percentage points. Unfortunately GSS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); GSS investors were disappointed as the stock returned -11.6% since the end of the third quarter (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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