Hedge Funds Aren’t Crazy About Midway Gold Corp (USA) (MDW) Anymore

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Midway Gold Corp (USA) (NYSEAMEX:MDW) has seen a decrease in enthusiasm from smart money of late.

According to most investors, hedge funds are perceived as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds trading at the moment, we look at the bigwigs of this group, around 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total capital, and by paying attention to their best picks, we have determined a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, positive insider trading activity is another way to parse down the marketplace. As the old adage goes: there are plenty of motivations for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this strategy if piggybackers know what to do (learn more here).

With all of this in mind, we’re going to take a glance at the latest action surrounding Midway Gold Corp (USA) (NYSEAMEX:MDW).

Hedge fund activity in Midway Gold Corp (USA) (NYSEAMEX:MDW)

Heading into Q2, a total of 5 of the hedge funds we track held long positions in this stock, a change of -17% from the first quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially.

Midway Gold Corp (USA) (NYSEAMEX:MDW)Of the funds we track, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the biggest position in Midway Gold Corp (USA) (NYSEAMEX:MDW). Nantahala Capital Management has a $1.9 million position in the stock, comprising 0.3% of its 13F portfolio. On Nantahala Capital Management’s heels is Peter Franklin Palmedo of Sun Valley Gold, with a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Chuck Royce’s Royce & Associates, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners and Andrew R. Midler’s Savitr Capital.

Since Midway Gold Corp (USA) (NYSEAMEX:MDW) has witnessed a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Cliff Asness’s AQR Capital Management sold off the largest position of the “upper crust” of funds we key on, totaling an estimated $0.1 million in stock.. Ken Griffin’s fund, Citadel Investment Group, also dropped its stock, about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.

What do corporate executives and insiders think about Midway Gold Corp (USA) (NYSEAMEX:MDW)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has seen transactions within the past half-year. Over the last half-year time period, Midway Gold Corp (USA) (NYSEAMEX:MDW) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Midway Gold Corp (USA) (NYSEAMEX:MDW). These stocks are Richmont Mines Inc. (USA) (NYSEAMEX:RIC), Comstock Mining, Inc. (NYSEAMEX:LODE), Brigus Gold Corp (USA) (NYSEAMEX:BRD), Vista Gold Corp. (NYSEAMEX:VGZ), and International Tower Hill Mines Ltd(USA] (NYSEAMEX:THM). This group of stocks belong to the gold industry and their market caps are similar to MDW’s market cap.

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