Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Hecla Mining Company (NYSE:HL).
Hecla Mining Company (NYSE:HL) investors should be aware of a decrease in enthusiasm from smart money in recent months. Hecla Mining Company (NYSE:HL) was in 7 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with Hecla Mining Company (NYSE:HL) holdings at the end of the previous quarter. It is important to note that the stock lost only 2.53% of its value during the quarter, indicating towards other reasons for the hedge funds’ pessimism.
The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Cash America International, Inc. (NYSE:CSH), TriMas Corp (NASDAQ:TRS), and Green Plains Inc. (NASDAQ:GPRE) to gather more data points.
According to most stock holders, hedge funds are viewed as unimportant, old financial tools of years past. While there are more than 8000 funds trading at the moment, our researchers hone in on the leaders of this group, approximately 700 funds. It is estimated that this group of investors direct the lion’s share of all hedge funds’ total asset base, and by tailing their inimitable equity investments, Insider Monkey has identified several investment strategies that have historically outperformed the market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, let’s take a peek at the fresh action surrounding Hecla Mining Company (NYSE:HL).
What does the smart money think about Hecla Mining Company (NYSE:HL)?
At the end of Q3, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 36% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Joseph A. Jolson’s Harvest Capital Strategies has the largest position in Hecla Mining Company (NYSE:HL), worth close to $5.9 million, corresponding to 1.1% of its total 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $5.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Renaissance Technologies, Eric Sprott’s Sprott Asset Management, and Ken Griffin’s Citadel Investment Group.
Due to the fact that Hecla Mining Company (NYSE:HL) has faced a declination in interest from the smart money, logic holds that there were a few hedge funds that slashed their positions entirely in the third quarter. It’s worth mentioning that J. Alan Reid, Jr.’s Forward Management cut the largest position of all the hedgies watched by Insider Monkey, totaling about $0.7 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $0.2 million worth of shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Hecla Mining Company (NYSE:HL). These stocks are Cash America International, Inc. (NYSE:CSH), TriMas Corp (NASDAQ:TRS), Green Plains Renewable Energy Inc. (NASDAQ:GPRE), and Cardinal Financial Corporation (NASDAQ:CFNL). This group of stocks’ market valuations resemble Hecla Mining Company (NYSE:HL)’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $14 million in Hecla Mining Company (NYSE:HL)’s case. Green Plains Renewable Energy Inc. (NASDAQ:GPRE) is the most popular stock in this table. On the other hand, Cardinal Financial Corporation (NASDAQ:CFNL) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks, Hecla Mining Company (NYSE:HL) is even less popular than Cardinal Financial Corporation (NASDAQ:CFNL). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.