Do Hedge Funds Love Newmont Mining Corp (NEM)?

The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we analyze what the smart money thinks of Newmont Mining Corp (NYSE:NEM) and find out how it is affected by hedge funds’ moves.

Newmont Mining Corp (NYSE:NEM) was in 38 hedge funds’ portfolios at the end of the third quarter of 2016. NEM has seen a decrease in hedge fund interest of late. There were 39 hedge funds in our database with NEM holdings at the end of the previous quarter. 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 Illumina, Inc. (NASDAQ:ILMN), Wisconsin Energy Corporation (NYSE:WEC), and SunTrust Banks, Inc. (NYSE:STI) to gather more data points.

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With all of this in mind, we’re going to go over the key action encompassing Newmont Mining Corp (NYSE:NEM).

How are hedge funds trading Newmont Mining Corp (NYSE:NEM)?

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 3% from the second quarter of 2016. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in Newmont Mining Corp (NYSE:NEM), worth close to $117.3 million, corresponding to 0.2% of its total 13F portfolio. Coming in second is Millennium Management, led by Israel Englander, holding a $68 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Robert Polak’s Anchor Bolt Capital, Robert Bishop’s Impala Asset Management and Mario Gabelli’s GAMCO Investors.

Due to the fact that Newmont Mining Corp (NYSE:NEM) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there were a few hedgies that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Jean-Marie Eveillard’s First Eagle Investment Management cut the largest position of all the hedgies monitored by Insider Monkey, valued at close to $56.3 million in stock. William B. Gray’s fund, Orbis Investment Management, also sold off its stock, about $52.6 million worth of Newmont shares. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 fund by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Newmont Mining Corp (NYSE:NEM) but similarly valued. We will take a look at Illumina, Inc. (NASDAQ:ILMN), Wisconsin Energy Corporation (NYSE:WEC), SunTrust Banks, Inc. (NYSE:STI), and Campbell Soup Company (NYSE:CPB). This group of stocks’ market caps are closest to NEM’s market cap.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $380 million. That figure was $888 million in NEM’s case. SunTrust Banks, Inc. (NYSE:STI) is the most popular stock in this table. On the other hand Wisconsin Energy Corporation (NYSE:WEC) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Newmont Mining Corp (NYSE:NEM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none.