During the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 7 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of First Majestic Silver Corp (NYSE:AG) and see how the stock is affected by the recent hedge fund activity.
Hedge fund interest in First Majestic Silver Corp (NYSE:AG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AG to other stocks including Bright Scholar Education Holdings Limited (NYSE:BEDU), SRC Energy Inc. (NYSE:SRCI), and BrightSphere Investment Group plc (NYSE:BSIG) to get a better sense of its popularity.
According to most shareholders, hedge funds are perceived as unimportant, outdated investment vehicles of the past. While there are greater than 8000 funds in operation at the moment, Our experts look at the moguls of this group, around 750 funds. Most estimates calculate that this group of people watch over the lion’s share of the hedge fund industry’s total asset base, and by keeping track of their unrivaled stock picks, Insider Monkey has discovered various investment strategies that have historically outpaced the market. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s take a gander at the recent hedge fund action surrounding First Majestic Silver Corp (NYSE:AG).
What does the smart money think about First Majestic Silver Corp (NYSE:AG)?
Heading into the first quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AG over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Marshall Wace LLP held the most valuable stake in First Majestic Silver Corp (NYSE:AG), which was worth $3.5 million at the end of the fourth quarter. On the second spot was Sprott Asset Management which amassed $3.1 million worth of shares. Moreover, D E Shaw, Citadel Investment Group, and Slate Path Capital were also bullish on First Majestic Silver Corp (NYSE:AG), allocating a large percentage of their portfolios to this stock.
Due to the fact that First Majestic Silver Corp (NYSE:AG) has faced declining sentiment from the smart money, it’s safe to say that there exists a select few fund managers that elected to cut their full holdings in the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $0.9 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $0.2 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as First Majestic Silver Corp (NYSE:AG) but similarly valued. These stocks are Bright Scholar Education Holdings Limited (NYSE:BEDU), SRC Energy Inc. (NYSE:SRCI), BrightSphere Investment Group plc (NYSE:BSIG), and Monmouth R.E. Inv. Corp. (NYSE:MNR). This group of stocks’ market caps match AG’s market cap.
|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 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $12 million in AG’s case. BrightSphere Investment Group plc (NYSE:BSIG) is the most popular stock in this table. On the other hand Bright Scholar Education Holdings Limited (NYSE:BEDU) is the least popular one with only 8 bullish hedge fund positions. First Majestic Silver Corp (NYSE:AG) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AG wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); AG investors were disappointed as the stock returned 0.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.