Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Northern Dynasty Minerals Ltd. (NYSE:NAK).
Northern Dynasty Minerals Ltd. (NYSE:NAK) has seen a decrease in hedge fund sentiment recently. NAK was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with NAK holdings at the end of the previous quarter. Our calculations also showed that NAK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of methods market participants have at their disposal to appraise stocks. A couple of the most under-the-radar methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the broader indices by a superb margin (see the details here).
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the fresh hedge fund action encompassing Northern Dynasty Minerals Ltd. (NYSE:NAK).
What have hedge funds been doing with Northern Dynasty Minerals Ltd. (NYSE:NAK)?
At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in NAK over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Kopernik Global Investors was the largest shareholder of Northern Dynasty Minerals Ltd. (NYSE:NAK), with a stake worth $6.9 million reported as of the end of September. Trailing Kopernik Global Investors was Invenomic Capital Management, which amassed a stake valued at $0.3 million. GRT Capital Partners, Citadel Investment Group, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to Northern Dynasty Minerals Ltd. (NYSE:NAK), around 1.46% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, earmarking 0.28 percent of its 13F equity portfolio to NAK.
Seeing as Northern Dynasty Minerals Ltd. (NYSE:NAK) has witnessed a decline in interest from the smart money, it’s easy to see that there was a specific group of funds that elected to cut their positions entirely in the first quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $0.3 million in stock, and Renaissance Technologies was right behind this move, as the fund said goodbye to about $0.1 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds in the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Northern Dynasty Minerals Ltd. (NYSE:NAK) but similarly valued. We will take a look at Provident Bancorp, Inc. (NASDAQ:PVBC), Chuy’s Holdings Inc (NASDAQ:CHUY), X Financial (NYSE:XYF), and Westwood Holdings Group, Inc. (NYSE:WHG). This group of stocks’ market values are closest to NAK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PVBC | 6 | 5603 | -2 |
| CHUY | 10 | 14149 | 1 |
| XYF | 2 | 415 | -1 |
| WHG | 9 | 26136 | 0 |
| Average | 6.75 | 11576 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $7 million in NAK’s case. Chuy’s Holdings Inc (NASDAQ:CHUY) is the most popular stock in this table. On the other hand X Financial (NYSE:XYF) is the least popular one with only 2 bullish hedge fund positions. Northern Dynasty Minerals Ltd. (NYSE:NAK) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on NAK as the stock returned 233.3% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
