Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Is IAMGOLD Corp (USA) (NYSE:IAG) ready to rally soon? The smart money is in a bullish mood. The number of bullish hedge fund bets that are revealed through the 13F filings went up by 7 lately. IAGwas in 17 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with IAG holdings at the end of the previous quarter. 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 Trustmark Corp (NASDAQ:TRMK), Intra-Cellular Therapies Inc (NASDAQ:ITCI), and California Water Service Group (NYSE:CWT) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to take a glance at the latest action regarding IAMGOLD Corp (USA) (NYSE:IAG).
What does the smart money think about IAMGOLD Corp (USA) (NYSE:IAG)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a boost of 70% from the second quarter of 2016. On the other hand, there were a total of 8 hedge funds with a bullish position in IAG at the beginning of this year. 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, Jim Simons’ Renaissance Technologies holds the biggest position in IAMGOLD Corp (USA) (NYSE:IAG). According to regulatory filings, the fund has a $61.7 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $44.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions comprise John Paulson’s Paulson & Co, Israel Englander’s Millennium Management and Eric Sprott’s Sprott Asset Management. We should note that Sprott Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, specific money managers were breaking ground themselves. Sprott Asset Management, led by Eric Sprott, initiated the most outsized position in IAMGOLD Corp (USA) (NYSE:IAG). According to its latest 13F filing, the fund had $4.2 million invested in the company at the end of the quarter. Peter Franklin Palmedo’s Sun Valley Gold also initiated a $2 million position during the quarter. The following funds were also among the new IAG investors: John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as IAMGOLD Corp (USA) (NYSE:IAG) but similarly valued. We will take a look at Trustmark Corp (NASDAQ:TRMK), Intra-Cellular Therapies Inc (NASDAQ:ITCI), California Water Service Group (NYSE:CWT), and Time Inc (NYSE:TIME). This group of stocks’ market valuations are similar to IAG’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $155 million in IAG’s case. Time Inc (NYSE:TIME) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 7 bullish hedge fund positions. IAMGOLD Corp (USA) (NYSE:IAG) 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. In this regard TIME might be a better candidate to consider taking a long position in.