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Hedge Funds Aren’t Digging Agnico Eagle Mines Limited (AEM)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Agnico Eagle Mines Limited (NYSE:AEM).

Agnico Eagle Mines Limited (NYSE:AEM) was in 25 hedge funds’ portfolios at the end of March. AEM investors should be aware of a decrease in hedge fund interest of late. There were 34 hedge funds in our database with AEM holdings at the end of the previous quarter. Our calculations also showed that AEM 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.

To the average investor there are many tools market participants put to use to analyze publicly traded companies. Some of the most underrated tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outclass their index-focused peers by a significant margin (see the details here).

Alex Litowitz Magnetar Capital

Alex Litowitz of Magnetar Capital

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing Agnico Eagle Mines Limited (NYSE:AEM).

Hedge fund activity in Agnico Eagle Mines Limited (NYSE:AEM)

Heading into the second quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the fourth quarter of 2019. By comparison, 24 hedge funds held shares or bullish call options in AEM a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the largest position in Agnico Eagle Mines Limited (NYSE:AEM). Renaissance Technologies has a $162.5 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Sprott Asset Management, managed by Eric Sprott, which holds a $48.6 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Agnico Eagle Mines Limited (NYSE:AEM), around 4.45% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, earmarking 2.77 percent of its 13F equity portfolio to AEM.

Due to the fact that Agnico Eagle Mines Limited (NYSE:AEM) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedgies that decided to sell off their full holdings last quarter. Intriguingly, Stanley Druckenmiller’s Duquesne Capital said goodbye to the biggest investment of all the hedgies tracked by Insider Monkey, comprising close to $46.1 million in stock. John Paulson’s fund, Paulson & Co, also dumped its stock, about $37.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 9 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Agnico Eagle Mines Limited (NYSE:AEM) but similarly valued. These stocks are W.R. Berkley Corporation (NYSE:WRB), NiSource Inc. (NYSE:NI), DaVita Inc (NYSE:DVA), and Masimo Corporation (NASDAQ:MASI). This group of stocks’ market caps are similar to AEM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WRB 26 208286 -8
NI 27 641894 -1
DVA 43 3657786 5
MASI 31 156950 1
Average 31.75 1166229 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $1166 million. That figure was $392 million in AEM’s case. DaVita Inc (NYSE:DVA) is the most popular stock in this table. On the other hand W.R. Berkley Corporation (NYSE:WRB) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Agnico Eagle Mines Limited (NYSE:AEM) is even less popular than WRB. Hedge funds clearly dropped the ball on AEM as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on AEM as the stock returned 55.9% so far in 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.