Hedge Funds Are Buying Barrick Gold Corporation (ABX)

Is Barrick Gold Corporation (NYSE:ABX) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.

Is Barrick Gold Corporation (NYSE:ABX) undervalued? The smart money is buying. The number of bullish hedge fund positions went up by 4 recently. Our calculations also showed that abx isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Ken Griffin

Let’s take a look at the fresh hedge fund action regarding Barrick Gold Corporation (NYSE:ABX).

How are hedge funds trading Barrick Gold Corporation (NYSE:ABX)?

Heading into the fourth quarter of 2018, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. By comparison, 32 hedge funds held shares or bullish call options in ABX heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with ABX Positions

More specifically, Adage Capital Management was the largest shareholder of Barrick Gold Corporation (NYSE:ABX), with a stake worth $129.8 million reported as of the end of September. Trailing Adage Capital Management was Citadel Investment Group, which amassed a stake valued at $111.2 million. Orbis Investment Management, Renaissance Technologies, and Wexford Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, some big names were breaking ground themselves. Wexford Capital, managed by Charles Davidson and Joseph Jacobs, created the most outsized position in Barrick Gold Corporation (NYSE:ABX). Wexford Capital had $27.9 million invested in the company at the end of the quarter. David Greenspan’s Slate Path Capital also made a $6 million investment in the stock during the quarter. The other funds with new positions in the stock are Larry Foley and Paul Farrell’s Bronson Point Partners, Robert Polak’s Anchor Bolt Capital, and Anand Parekh’s Alyeska Investment Group.

Let’s also examine hedge fund activity in other stocks similar to Barrick Gold Corporation (NYSE:ABX). We will take a look at Vistra Energy Corp. (NYSE:VST), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), Icahn Enterprises LP (NASDAQ:IEP), and Cadence Design Systems Inc (NASDAQ:CDNS). All of these stocks’ market caps are closest to ABX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VST 38 3596019 -5
KOF 8 474382 -1
IEP 4 12234177 1
CDNS 32 1309588 10
Average 20.5 4403542 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $4.40 billion. That figure was $487 million in ABX’s case. Vistra Energy Corp. (NYSE:VST) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. Barrick Gold Corporation (NYSE:ABX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VST might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.