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Hedge Funds Are Crazy About Yamana Gold Inc. (AUY)

At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Yamana Gold Inc. (NYSE:AUY) makes for a good investment right now.

Is Yamana Gold Inc. (NYSE:AUY) a healthy stock for your portfolio? Money managers are becoming more confident. The number of long hedge fund positions moved up by 2 recently. Our calculations also showed that AUY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Phill Gross of Adage Capital Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the fresh hedge fund action regarding Yamana Gold Inc. (NYSE:AUY).

How are hedge funds trading Yamana Gold Inc. (NYSE:AUY)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in AUY a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the most valuable position in Yamana Gold Inc. (NYSE:AUY), worth close to $75.9 million, amounting to 0.1% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $39.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Israel Englander’s Millennium Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Prince Street Capital Management allocated the biggest weight to Yamana Gold Inc. (NYSE:AUY), around 11.19% of its 13F portfolio. Signition LP is also relatively very bullish on the stock, setting aside 0.57 percent of its 13F equity portfolio to AUY.

As industrywide interest jumped, some big names were breaking ground themselves. Prince Street Capital Management, managed by David Halpert, created the largest position in Yamana Gold Inc. (NYSE:AUY). Prince Street Capital Management had $17.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $2.4 million position during the quarter. The following funds were also among the new AUY investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt. and Donald Sussman’s Paloma Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Yamana Gold Inc. (NYSE:AUY) but similarly valued. These stocks are Medpace Holdings, Inc. (NASDAQ:MEDP), FS KKR Capital Corp. (NYSE:FSK), Omnicell, Inc. (NASDAQ:OMCL), and HMS Holdings Corp. (NASDAQ:HMSY). This group of stocks’ market values are similar to AUY’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MEDP 20 177896 5
FSK 22 211845 6
OMCL 11 102788 -7
HMSY 21 126466 0
Average 18.5 154749 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $155 million. That figure was $224 million in AUY’s case. FS KKR Capital Corp. (NYSE:FSK) is the most popular stock in this table. On the other hand Omnicell, Inc. (NASDAQ:OMCL) is the least popular one with only 11 bullish hedge fund positions. Yamana Gold Inc. (NYSE:AUY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on AUY as the stock returned 12.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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