Hedge Funds, Market Bearish On NovaGold Resources Inc. (USA) (NG) As It Posts Expected Earnings

Shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) fell 8.19% yesterday due to weak market sentiment, even before the gold miner reported its second quarter financial results after the market closed. The Canadian company posted a net loss of $9.2 million for the quarter, which was lower than its loss of $10.7 million year-over-year. For the second quarter, loss per diluted share was $0.03, equaling the loss per share in the same quarter a year ago as well. Analysts on Wall Street were expecting the same loss per share of $0.03 for the mineral company.  At the end of the company’s fiscal second quarter, which ended on May 31, 2015, it had $135 million in available cash and terms deposits, along with total assets worth $464.82 million. NovaGold Resources Inc. (USA) (NYSEMKT:NG) reported steady growth in its Donlin Gold project, with the preparation of the preliminary draft EIS in accordance with relevant agencies. The gold miner added, “The release of the preliminary draft EIS is a major step in the process leading to publication of the draft EIS for public comment. The Donlin Gold EIS represents a very thorough and thoughtful analysis of the project.” It is important to consider that the project is among one of the largest undeveloped gold deposits in the world, with estimated gold reserves of 33.8 million ounces.

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Despite the pessimistic dip yesterday, shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) have grown by 10.5% year-to-date and are up by 4.14% in morning trading. Nonetheless, the smart money has been slightly bearish on the stock of the gold and copper mineral explorer company of late, as only 14 hedge funds maintained positions in NovaGold with total holdings of $218.19 million on March 31, compared to $221.93 million in shares held by 15 investors at the end of 2014. As shares were essentially flat in the first quarter, it did not impact the small decrease in the value of holdings of the top money managers.

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Insider activity within a company indicates the future development and confidence that insiders have in its direction. During the past six months, the only insider activity concerning NovaGold Resources Inc. (USA) (NYSEMKT:NG) involved the sale of 20,016 shares in two transactions by Director Gillyeard Leathley.

With all of this in mind, we’re going to take a look at the recent hedge fund action surrounding NovaGold Resources Inc. (USA) (NYSEAMEX:NG).

What does the smart money think about NovaGold Resources Inc. (USA) (NYSEAMEX:NG)?

Heading into the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 7% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly.

According to hedge fund experts at Insider Monkey, Paulson & Co, managed by John Paulson, holds the number one position in NovaGold Resources Inc. (USA) (NYSEAMEX:NG). Paulson & Co has a $104.9 million position in the stock, owning 35.62 million shares, which comprises 0.5% of its 13F portfolio. Coming in second is Baupost Group, led by Seth Klarman, holding a $64.2 million position and ownership of 21.69 million shares of the gold miner; the fund has 1.1% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Robert Pitts‘ Steadfast Capital Management, David Iben’s Kopernik Global Investors, and John A. Levin’s Levin Capital Strategies.

Due to the fact that NovaGold Resources Inc. (USA) (NYSEAMEX:NG) has experienced bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies who sold off their positions entirely in the first quarter. Intriguingly, Jim Simons‘ Renaissance Technologies said goodbye to the largest stake of the 700 funds followed by Insider Monkey, worth an estimated $481,000 in stock, while David Costen Haley of HBK Investments was right behind this move, as the fund manager said goodbye to about $72,000 worth of shares. These bearish behaviors are important to note, as total hedge fund interest fell during the first quarter.

Despite potential gold mining prospects at Donlin Gold, the gold miner has reported a loss for another quarter; hence, we do not recommend a buy for the shares of NovaGold Resources at this moment.

Disclosure: None