As the U.S dollar displays weakness against other currencies and equity markets around the globe continue to slide, the charm of gold as an investment is rising today, pushing the shares of firms like Goldcorp Inc. (USA) (NYSE:GG), Newmont Mining Corp (NYSE:NEM) and Barrick Gold Corporation (USA) (NYSE:ABX), which deal in the precious metal, higher. The boost to gold, and consequently the stocks mentioned, is further heightened by anticipation in the markets regarding Federal Reserve Chair Janet Yellen’s lecture later today at the University of Massachusetts which is expected to further clarify why the Fed left interest rates the same last week and give hints as to when U.S interest rates may be raised. Is it time to climb aboard the wagon and join the gold rush? Based on our data, hedge funds favor only two of the three above-mentioned stocks, as we will see in the discussion below.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 118% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Today, Goldcorp Inc. (USA) (NYSE:GG) has risen by over 6%, which can be attributed to the price of gold for December delivery going up by 2% to $1,154.10 per troy ounce on the COMEX this morning. Hedge funds, meanwhile, are bullish on Goldcorp Inc. (USA) (NYSE:GG). There was an increase of five hedge funds with long positions in the stock during the second quarter to 24. Furthermore, while the stock saw a substantial decline of 10.59% in price during said period, hedge funds’ holdings were upped by 5.54% from the end of the first quarter to $848.23 million by the end of June. The hedge funds we follow also owned 6.3% of the outstanding shares of Goldcorp. By June 30, First Eagle Investment Management owned about 38.11 million shares of Goldcorp.