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Hedge Funds Watching Solitario Zinc Corp. (XPL) From Afar

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 34.7% in 2019 (through November 22) and outperformed the broader market benchmark by 8.5 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Hedge fund interest in Solitario Zinc Corp. (NYSE:XPL) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tocagen Inc. (NASDAQ:TOCA), SIFCO Industries, Inc. (NYSEAMEX:SIF), and American Shared Hospital Services (NYSE:AMS) to gather more data points. Our calculations also showed that XPL isn’t among the 30 most popular stocks among hedge funds.

To most traders, hedge funds are perceived as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open today, We look at the bigwigs of this club, about 750 funds. These hedge fund managers watch over the lion’s share of the hedge fund industry’s total capital, and by shadowing their matchless investments, Insider Monkey has identified several investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

MILLENNIUM MANAGEMENT

Israel Englander of Millennium Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the latest hedge fund action surrounding Solitario Zinc Corp. (NYSE:XPL).

What does smart money think about Solitario Zinc Corp. (NYSE:XPL)?

At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards XPL over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

XPL_nov2019

The largest stake in Solitario Zinc Corp. (NYSE:XPL) was held by Renaissance Technologies, which reported holding $0.1 million worth of stock at the end of September. It was followed by Millennium Management with a $0.1 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Solitario Zinc Corp. (NYSE:XPL) but similarly valued. We will take a look at Tocagen Inc. (NASDAQ:TOCA), SIFCO Industries, Inc. (NYSEAMEX:SIF), American Shared Hospital Services (NYSE:AMS), and CYANOTECH CORP (NASDAQ:CYAN). This group of stocks’ market caps match XPL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TOCA 6 797 -4
SIF 5 1530 1
AMS 1 41 0
CYAN 1 358 -1
Average 3.25 682 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $0 million in XPL’s case. Tocagen Inc. (NASDAQ:TOCA) is the most popular stock in this table. On the other hand American Shared Hospital Services (NYSE:AMS) is the least popular one with only 1 bullish hedge fund positions. Solitario Zinc Corp. (NYSE:XPL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately XPL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); XPL investors were disappointed as the stock returned 0% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market in Q4.

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

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