Hedge Funds Are Crazy About Sandstorm Gold Ltd. (NYSEMKT:SAND)

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Is Sandstorm Gold Ltd. (NYSEMKT:SAND) a bargain? The best stock pickers are altogether getting more bullish. The number of long hedge fund positions experienced an increase of 1 in recent months. There were 10 hedge funds in our database with SAND holdings at the end of the previous quarter, versus 11 at the end of Q3. At the end of this article we will also compare SAND to other stocks including Encore Wire Corporation (NASDAQ:WIRE), Constellium NV (NYSE:CSTM), and Wave Life Sciences Ltd (NASDAQ:WVE) to get a better sense of its popularity.

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Now, we’re going to take a glance at the fresh action regarding Sandstorm Gold Ltd. (NYSEMKT:SAND).

Hedge fund activity in Sandstorm Gold Ltd. (NYSE:SAND)

Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in SAND heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

HedgeFund

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, has the most valuable position in Sandstorm Gold Ltd. (NYSE:SAND), worth close to $7.1 million, corresponding to less than 0.1% of its total 13F portfolio. Coming in second is D E Shaw, with a $4.2 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Israel Englander’s Millennium Management, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors and Murray Stahl’s Horizon Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Waratah Capital Advisors, led by Brad Dunkley and Blair Levinsky, created the biggest position in Sandstorm Gold Ltd. (NYSE:SAND). Waratah Capital Advisors had $3.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management and Richard Driehaus’s Driehaus Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Sandstorm Gold Ltd. (NYSE:SAND). These stocks are Encore Wire Corporation (NASDAQ:WIRE), Constellium NV (NYSE:CSTM), Wave Life Sciences Ltd (NASDAQ:WVE), and Innophos Holdings, Inc. (NASDAQ:IPHS). This group of stocks’ market caps are closest to SAND’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WIRE 12 43824 -4
CSTM 32 283817 4
WVE 5 299656 -1
IPHS 17 55931 3

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $25 million in SAND’s case. Constellium NV (NYSE:CSTM) is the most popular stock in this table. On the other hand Wave Life Sciences Ltd (NASDAQ:WVE) is the least popular one with only 5 bullish hedge fund positions. Sandstorm Gold Ltd. (NYSE:SAND) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CSTM might be a better candidate to consider taking a long position in.