Hedge Funds Aren’t Crazy About McEwen Mining Inc (MUX) Anymore

McEwen Mining Inc (NYSE:MUX) was in 4 hedge funds’ portfolio at the end of December. MUX shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. There were 7 hedge funds in our database with MUX holdings at the end of the previous quarter.

If you’d ask most shareholders, hedge funds are assumed to be slow, old financial vehicles of years past. While there are greater than 8000 funds with their doors open today, we at Insider Monkey look at the moguls of this group, about 450 funds. Most estimates calculate that this group controls the lion’s share of the hedge fund industry’s total asset base, and by tracking their highest performing equity investments, we have formulated a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Chuck Royce

Just as important, optimistic insider trading activity is another way to parse down the investments you’re interested in. As the old adage goes: there are a number of motivations for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this strategy if you understand what to do (learn more here).

Consequently, it’s important to take a gander at the recent action regarding McEwen Mining Inc (NYSE:MUX).

Hedge fund activity in McEwen Mining Inc (NYSE:MUX)

In preparation for this year, a total of 4 of the hedge funds we track were bullish in this stock, a change of -43% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in McEwen Mining Inc (NYSE:MUX). Royce & Associates has a $41.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Eric Sprott of Sprott Asset Management, with a $10.5 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Murray Stahl’s Horizon Asset Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.

Due to the fact that McEwen Mining Inc (NYSE:MUX) has faced falling interest from the smart money, it’s safe to say that there exists a select few hedge funds who were dropping their entire stakes in Q4. It’s worth mentioning that Israel Englander’s Millennium Management dumped the biggest position of the 450+ funds we monitor, totaling an estimated $1.2 million in stock., and D. E. Shaw of D E Shaw was right behind this move, as the fund dumped about $1.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds in Q4.

How are insiders trading McEwen Mining Inc (NYSE:MUX)?

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past six months. Over the latest 180-day time frame, McEwen Mining Inc (NYSE:MUX) has experienced 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to McEwen Mining Inc (NYSE:MUX). These stocks are Taseko Mines Limited (USA) (NYSEAMEX:TGB), Denison Mines Corp (USA) (NYSEAMEX:DNN), MFC Industrial Ltd (NYSE:MIL), Platinum Group Metals Limited (USA) (NYSEAMEX:PLG), and Materion Corp (NYSE:MTRN). This group of stocks belong to the industrial metals & minerals industry and their market caps are closest to MUX’s market cap.