Goldcorp Inc. (USA) (GG): All That Glitters May Not Be Gold

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 Goldcorp Inc. (USA) (NYSE:GG) and find out how it is affected by hedge funds’ moves.

Is Goldcorp Inc. (USA) (NYSE:GG) ready to rally soon? The smart money is reducing their bets on the stock. The number of long hedge fund positions dropped by 4 recently. GG was in 24 hedge funds’ portfolios at the end of September. There were 28 hedge funds in our database with GG positions 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 CenturyLink, Inc. (NYSE:CTL), Expedia Inc (NASDAQ:EXPE), and Liberty Interactive Corp (NASDAQ:QVCA) to gather more data points.

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Hedge fund activity in Goldcorp Inc. (USA) (NYSE:GG)

Heading into the fourth quarter of 2016, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 14% drop from one quarter earlier, as hedge fund ownership of the stock fell to a 5-quarter low. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in Goldcorp Inc. (USA) (NYSE:GG). Arrowstreet Capital has a $166.2 million position in the stock. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $46.5 million position. Other peers with similar optimism contain Ken Griffin’s Citadel Investment Group, Ray Dalio’s Bridgewater Associates, and John Horseman’s Horseman Capital Management.

Seeing as Goldcorp Inc. (USA) (NYSE:GG) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers who sold off their entire stakes heading into Q4. At the top of the heap, First Eagle Investment Management cut the biggest stake of the 700 funds tracked by Insider Monkey, worth about $754.9 million in stock, and David Halpert’s Prince Street Capital Management was right behind this move, as the fund cut about $26.5 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Goldcorp Inc. (USA) (NYSE:GG). We will take a look at CenturyLink, Inc. (NYSE:CTL), Expedia Inc (NASDAQ:EXPE), Liberty Interactive Corp (NASDAQ:QVCA), and Nucor Corporation (NYSE:NUE). This group of stocks’ market valuations resemble GG’s market valuation.

As you can see these stocks had an average of 49.25 hedge funds with bullish positions and the average amount invested in these stocks was $2.17 billion. That figure was $311 million in GG’s case. Liberty Interactive Corp (NASDAQ:QVCA) is the most popular stock in this table. On the other hand CenturyLink, Inc. (NYSE:CTL) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Goldcorp Inc. (USA) (NYSE:GG) is even less popular than CTL. 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.

Disclosure: None