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Hedge Funds Dipping Their Toes Back Into 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 (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. 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) at the end of the second quarter and determine whether the smart money was really smart about this stock.

Is Agnico Eagle Mines Limited (NYSE:AEM) a good investment right now? The best stock pickers were turning bullish. The number of long hedge fund positions improved by 5 recently. Agnico Eagle Mines Limited (NYSE:AEM) was in 30 hedge funds’ portfolios at the end of June. The all time high for this statistics is 34. Our calculations also showed that AEM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 25 hedge funds in our database with AEM positions at the end of the first quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are numerous signals stock traders employ to analyze their stock investments. Some of the most under-the-radar signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outperform the broader indices by a superb amount (see the details here).

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to go over the key hedge fund action encompassing Agnico Eagle Mines Limited (NYSE:AEM).

What does smart money think about Agnico Eagle Mines Limited (NYSE:AEM)?

At the end of the second quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AEM over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the number one position in Agnico Eagle Mines Limited (NYSE:AEM). Renaissance Technologies has a $285.4 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $165.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism comprise Robert B. Gillam’s McKinley Capital Management, Eric Sprott’s Sprott Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Sloane Robinson Investment Management allocated the biggest weight to Agnico Eagle Mines Limited (NYSE:AEM), around 11.19% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, earmarking 3.59 percent of its 13F equity portfolio to AEM.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Sloane Robinson Investment Management, managed by Hugh Sloane, created the largest position in Agnico Eagle Mines Limited (NYSE:AEM). Sloane Robinson Investment Management had $13.8 million invested in the company at the end of the quarter. Dan Kozlowski’s Plaisance Capital also made a $2.8 million investment in the stock during the quarter. The following funds were also among the new AEM investors: Michael Gelband’s ExodusPoint Capital, Minhua Zhang’s Weld Capital Management, and Jonathan Dawson’s Southport Management.

Let’s check out hedge fund activity in other stocks similar to Agnico Eagle Mines Limited (NYSE:AEM). We will take a look at ORIX Corporation (NYSE:IX), Trip.com Group Limited (NASDAQ:TCOM), Invitation Homes Inc. (NYSE:INVH), Check Point Software Technologies Ltd. (NASDAQ:CHKP), Discover Financial Services (NYSE:DFS), Vulcan Materials Company (NYSE:VMC), and Telefonica Brasil SA (NYSE:VIV). This group of stocks’ market valuations are closest to AEM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IX 4 3765 0
TCOM 29 1235313 -2
INVH 33 694166 6
CHKP 28 725079 -1
DFS 44 740724 4
VMC 51 879902 2
VIV 12 99788 4
Average 28.7 625534 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $626 million. That figure was $594 million in AEM’s case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Agnico Eagle Mines Limited (NYSE:AEM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AEM is 64.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Hedge funds were also right about betting on AEM as the stock returned 35.3% during Q3 (through September 14th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.