Hedge Funds Are Cashing Out Of Kinross Gold Corporation (KGC)

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Kinross Gold Corporation (NYSE:KGC).

Kinross Gold Corporation (NYSE:KGC) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. Kinross Gold Corporation (NYSE:KGC) was in 27 hedge funds’ portfolios at the end of March. The all time high for this statistic is 36. There were 36 hedge funds in our database with KGC holdings at the end of December. Our calculations also showed that KGC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 S&P 500 ETFs by 115 percentage points since March 2017 (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.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the new hedge fund action encompassing Kinross Gold Corporation (NYSE:KGC).

Do Hedge Funds Think KGC Is A Good Stock To Buy Now?

At first quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in KGC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is KGC A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Renaissance Technologies has the largest position in Kinross Gold Corporation (NYSE:KGC), worth close to $240.5 million, corresponding to 0.3% of its total 13F portfolio. On Renaissance Technologies’s heels is Eric Sprott of Sprott Asset Management, with a $51.3 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Mark G. Schoeppner’s Quaker Capital Investments. In terms of the portfolio weights assigned to each position Quaker Capital Investments allocated the biggest weight to Kinross Gold Corporation (NYSE:KGC), around 8.55% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, dishing out 3.08 percent of its 13F equity portfolio to KGC.

Judging by the fact that Kinross Gold Corporation (NYSE:KGC) has faced falling interest from the smart money, it’s easy to see that there is a sect of fund managers who sold off their entire stakes last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of all the hedgies followed by Insider Monkey, comprising an estimated $102 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dropped about $7.8 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 9 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Kinross Gold Corporation (NYSE:KGC) but similarly valued. These stocks are Gold Fields Limited (NYSE:GFI), Hyatt Hotels Corporation (NYSE:H), Juniper Networks, Inc. (NYSE:JNPR), Gerdau SA (NYSE:GGB), Huntington Ingalls Industries Inc (NYSE:HII), Santander Consumer USA Holdings Inc (NYSE:SC), and Arrow Electronics, Inc. (NYSE:ARW). This group of stocks’ market valuations match KGC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GFI 15 323946 0
H 23 666787 -4
JNPR 29 317158 -2
GGB 11 224795 -4
HII 20 277613 -1
SC 23 309023 2
ARW 23 767932 -4
Average 20.6 412465 -1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $412 million. That figure was $445 million in KGC’s case. Juniper Networks, Inc. (NYSE:JNPR) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 11 bullish hedge fund positions. Kinross Gold Corporation (NYSE:KGC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KGC is 62.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately KGC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KGC were disappointed as the stock returned -5.2% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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