Is Fortuna Silver Mines Inc. (NYSE:FSM) a safe investment right now? Investors who are in the know are becoming less confident. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
In the 21st century investor’s toolkit, there are many metrics investors can use to watch their holdings. Two of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can outclass their index-focused peers by a healthy amount (see just how much).
Equally as important, positive insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are plenty of stimuli for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this method if shareholders know what to do (learn more here).
Keeping this in mind, let’s take a look at the key action encompassing Fortuna Silver Mines Inc. (NYSE:FSM).
How have hedgies been trading Fortuna Silver Mines Inc. (NYSE:FSM)?
Heading into Q2, a total of 7 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies we track, Sprott Asset Management, managed by Eric Sprott, holds the most valuable position in Fortuna Silver Mines Inc. (NYSE:FSM). Sprott Asset Management has a $36 million position in the stock, comprising 4.7% of its 13F portfolio. Sitting at the No. 2 spot is CQS Cayman LP, managed by Michael Hintze, which held a $3.2 million position; 0.4% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Charles Davidson’s Wexford Capital.
Since Fortuna Silver Mines Inc. (NYSE:FSM) has faced a declination in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of funds who were dropping their full holdings in Q1. Intriguingly, Steven Cohen’s SAC Capital Advisors said goodbye to the biggest investment of the “upper crust” of funds we track, comprising close to $0.3 million in stock. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Fortuna Silver Mines Inc. (NYSE:FSM)
Bullish insider trading is at its handiest when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time frame, Fortuna Silver Mines Inc. (NYSE:FSM) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Fortuna Silver Mines Inc. (NYSE:FSM). These stocks are Silvercorp Metals Inc. (USA) (NYSE:SVM), Endeavour Silver Corp. (CAN) (NYSE:EXK), Mag Silver Corp (USA) (NYSEAMEX:MVG), Great Panther Silver Ltd (USA) (NYSEAMEX:GPL), and Mines Management, Inc. (NYSEAMEX:MGN). This group of stocks are the members of the silver industry and their market caps match FSM’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Silvercorp Metals Inc. (USA) (NYSE:SVM)||8||0||0|
|Endeavour Silver Corp. (CAN) (NYSE:EXK)||6||0||0|
|Mag Silver Corp (USA) (NYSEAMEX:MVG)||8||0||0|
|Great Panther Silver Ltd (USA) (NYSEAMEX:GPL)||2||0||0|
|Mines Management, Inc. (NYSEAMEX:MGN)||1||1||0|
With the results shown by the aforementioned strategies, retail investors should always monitor hedge fund and insider trading sentiment, and Fortuna Silver Mines Inc. (NYSE:FSM) is an important part of this process.