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Endeavour Silver Corp. (CAN) (EXK): Hedge Funds and Insiders Are Bearish, What Should You Do?

Endeavour Silver Corp. (CAN) (NYSE:EXK) was in 6 hedge funds’ portfolio at the end of the fourth quarter of 2012. EXK shareholders have witnessed a decrease in hedge fund sentiment lately. There were 9 hedge funds in our database with EXK holdings at the end of the previous quarter.

In the eyes of most investors, hedge funds are assumed to be underperforming, old investment tools of years past. While there are more than 8000 funds with their doors open today, we look at the masters of this group, around 450 funds. It is widely believed that this group controls the lion’s share of all hedge funds’ total capital, and by watching their top equity investments, we have come up with a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Equally as beneficial, positive insider trading activity is another way to break down the marketplace. There are many incentives for a corporate insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Many academic studies have demonstrated the market-beating potential of this method if “monkeys” understand what to do (learn more here).

Now, it’s important to take a look at the key action surrounding Endeavour Silver Corp. (CAN) (NYSE:EXK).

What does the smart money think about Endeavour Silver Corp. (CAN) (NYSE:EXK)?

Heading into 2013, a total of 6 of the hedge funds we track were long in this stock, a change of -33% from the third quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably.

Of the funds we track, Jim Simons’s Renaissance Technologies had the biggest position in Endeavour Silver Corp. (CAN) (NYSE:EXK), worth close to $29.7 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $11.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedgies with similar optimism include Eric Sprott’s Sprott Asset Management, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

Seeing as Endeavour Silver Corp. (CAN) (NYSE:EXK) has faced bearish sentiment from the smart money, we can see that there were a few hedgies that slashed their positions entirely last quarter. It’s worth mentioning that Peter Algert and Kevin Coldiron’s Algert Coldiron Investors said goodbye to the biggest position of the 450+ funds we key on, totaling about $0.6 million in stock., and Roberto Mignone of Bridger Management was right behind this move, as the fund sold off about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.

Insider trading activity in Endeavour Silver Corp. (CAN) (NYSE:EXK)

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past half-year. Over the latest six-month time period, Endeavour Silver Corp. (CAN) (NYSE:EXK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Endeavour Silver Corp. (CAN) (NYSE:EXK). These stocks are First Majestic Silver Corp (NYSE:AG), Hecla Mining Company (NYSE:HL), Silver Standard Resources Inc. (USA) (NASDAQ:SSRI), Mag Silver Corp (USA) (NYSEAMEX:MVG), and Silvercorp Metals Inc. (USA) (NYSE:SVM). This group of stocks are in the silver industry and their market caps resemble EXK’s market cap.

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