Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Agnico Eagle Mines Limited (NYSE:AEM) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Agnico Eagle Mines Limited (NYSE:AEM) shares haven’t seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds’ portfolios at the end of December. At the end of this article we will also compare AEM to other stocks including Brookfield Infrastructure Partners L.P. (NYSE:BIP), RingCentral Inc (NYSE:RNG), and Genmab A/S (NASDAQ:GMAB) to get a better sense of its popularity.
According to most investors, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open today, Our experts choose to focus on the leaders of this club, approximately 850 funds. It is estimated that this group of investors shepherd bulk of all hedge funds’ total asset base, and by keeping track of their first-class equity investments, Insider Monkey has deciphered several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the latest hedge fund action regarding Agnico Eagle Mines Limited (NYSE:AEM).
Hedge fund activity in Agnico Eagle Mines Limited (NYSE:AEM)
Heading into the first quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in AEM a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Agnico Eagle Mines Limited (NYSE:AEM), which was worth $136.8 million at the end of the third quarter. On the second spot was Duquesne Capital which amassed $46.1 million worth of shares. Paulson & Co, McKinley Capital Management, and Polar Capital 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 Chiron Investment Management allocated the biggest weight to Agnico Eagle Mines Limited (NYSE:AEM), around 2.98% of its 13F portfolio. Claar Advisors is also relatively very bullish on the stock, earmarking 2.38 percent of its 13F equity portfolio to AEM.
Seeing as Agnico Eagle Mines Limited (NYSE:AEM) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds that slashed their positions entirely heading into Q4. Intriguingly, Louis Bacon’s Moore Global Investments cut the largest investment of all the hedgies followed by Insider Monkey, comprising about $3.2 million in stock. Qing Li’s fund, Sciencast Management, also dropped its stock, about $2.7 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review 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 Brookfield Infrastructure Partners L.P. (NYSE:BIP), RingCentral Inc (NYSE:RNG), Genmab A/S (NASDAQ:GMAB), and Ulta Beauty, Inc. (NASDAQ:ULTA). 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|
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $967 million. That figure was $413 million in AEM’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 11 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately AEM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AEM were disappointed as the stock returned -37% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.