Hecla Mining Company (HL): Hedge Funds and Insiders Are Bearish, What Should You Do?

Hecla Mining Company (NYSE:HL) has experienced a decrease in hedge fund interest of late.

Hecla Mining Company (NYSE:HL)

To most market participants, hedge funds are assumed to be underperforming, old financial vehicles of the past. While there are more than 8000 funds trading at the moment, we at Insider Monkey look at the crème de la crème of this club, close to 450 funds. It is widely believed that this group oversees the lion’s share of the smart money’s total capital, and by keeping an eye on their top investments, we have come up with a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as key, optimistic insider trading activity is another way to break down the marketplace. There are a variety of motivations for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would buy. Various academic studies have demonstrated the useful potential of this method if shareholders know what to do (learn more here).

Keeping this in mind, we’re going to take a glance at the recent action encompassing Hecla Mining Company (NYSE:HL).

How are hedge funds trading Hecla Mining Company (NYSE:HL)?

At the end of the fourth quarter, a total of 6 of the hedge funds we track were long in this stock, a change of -40% from the third quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Hecla Mining Company (NYSE:HL). Royce & Associates has a $27.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Sprott Asset Management, managed by Eric Sprott, which held a $7.1 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include D. E. Shaw’s D E Shaw, and Cliff Asness’s AQR Capital Management.

Because Hecla Mining Company (NYSE:HL) has witnessed bearish sentiment from hedge fund managers, logic holds that there were a few fund managers that elected to cut their positions entirely in Q4. It’s worth mentioning that Charles Davidson’s Wexford Capital sold off the largest investment of the “upper crust” of funds we watch, worth close to $6.4 million in stock.. Anthony Bozza’s fund, Lakewood Capital Management, also dropped its stock, about $2.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds in Q4.

What do corporate executives and insiders think about Hecla Mining Company (NYSE:HL)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past half-year. Over the last half-year time frame, Hecla Mining Company (NYSE:HL) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Hecla Mining Company (NYSE:HL). These stocks are Endeavour Silver Corp. (CAN) (NYSE:EXK), Silvercorp Metals Inc. (USA) (NYSE:SVM), Coeur d’Alene Mines Corporation (NYSE:CDE), First Majestic Silver Corp (NYSE:AG), and Silver Standard Resources Inc. (USA) (NASDAQ:SSRI). All of these stocks are in the silver industry and their market caps match HL’s market cap.