Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about PolyMet Mining Corp. (NYSE:PLM).
PolyMet Mining Corp. (NYSE:PLM) investors should be aware of a decrease in support from the world’s most elite money managers lately. PolyMet Mining Corp. (NYSE:PLM) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 4. Our calculations also showed that PLM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of metrics investors use to assess publicly traded companies. Some of the most useful metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outperform the S&P 500 by a healthy amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a glance at the new hedge fund action encompassing PolyMet Mining Corp. (NYSE:PLM).
How have hedgies been trading PolyMet Mining Corp. (NYSE:PLM)?
At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in PLM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Two Sigma Advisors was the largest shareholder of PolyMet Mining Corp. (NYSE:PLM), with a stake worth $1.1 million reported as of the end of September. Trailing Two Sigma Advisors was Elkhorn Partners, which amassed a stake valued at $0.4 million. Paloma Partners was 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 Elkhorn Partners allocated the biggest weight to PolyMet Mining Corp. (NYSE:PLM), around 0.34% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, dishing out 0.0031 percent of its 13F equity portfolio to PLM.
Judging by the fact that PolyMet Mining Corp. (NYSE:PLM) has faced a decline in interest from the smart money, it’s safe to say that there is a sect of hedge funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Ken Fisher’s Fisher Asset Management cut the biggest investment of all the hedgies tracked by Insider Monkey, totaling close to $0 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $0 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to PolyMet Mining Corp. (NYSE:PLM). We will take a look at Kimbell Royalty Partners, LP (NYSE:KRP), Bicycle Therapeutics plc (NASDAQ:BCYC), dMY Technology Group, Inc. (NYSE:DMYT), Century Bancorp, Inc. (NASDAQ:CNBKA), Teekay Tankers Ltd. (NYSE:TNK), Par Pacific Holdings, Inc. (NYSE:PARR), and IDEAYA Biosciences, Inc. (NASDAQ:IDYA). This group of stocks’ market values are similar to PLM’s market value.
|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 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $2 million in PLM’s case. dMY Technology Group, Inc. (NYSE:DMYT) is the most popular stock in this table. On the other hand Kimbell Royalty Partners, LP (NYSE:KRP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks PolyMet Mining Corp. (NYSE:PLM) is even less popular than KRP. Our overall hedge fund sentiment score for PLM is 26.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards PLM. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately PLM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PLM investors were disappointed as the stock returned 3% since the end of the third quarter (through 11/23) 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 most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.