How Eldorado Gold Corp (USA) (EGO) Stacks Up Against Its Peers

The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Eldorado Gold Corp (USA) (NYSE:EGO) from the perspective of those elite funds.

Hedge fund interest in Eldorado Gold Corp (USA) (NYSE:EGO) shares was flat during the 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 Rayonier Inc. (NYSE:RYN), Urban Outfitters, Inc. (NASDAQ:URBN), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO) 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.

What have hedge funds been doing with Eldorado Gold Corp (USA) (NYSE:EGO)?

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the previous quarter. Hedge fund ownership has trended up slightly during the last year, but remains underwhelming. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, holds the number one position in Eldorado Gold Corp (USA) (NYSE:EGO). Blue Mountain Capital has a $29.5 million call position in the stock. Sitting at the No. 2 spot is Peter Franklin Palmedo of Sun Valley Gold, with a $14.5 million position. Some other peers that hold long positions include Robert Polak’s Anchor Bolt Capital, Cliff Asness’ AQR Capital Management and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.

Seeing as Eldorado Gold Corp (USA) (NYSE:EGO) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who sold off their full holdings by the end of the third quarter. Intriguingly, First Eagle Investment Management sold off the largest investment of the 700 funds followed by Insider Monkey, totaling about $29 million in call options, and Jacob Gottlieb’s Visium Asset Management was right behind this move, as the fund dropped about $25.2 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Eldorado Gold Corp (USA) (NYSE:EGO) but similarly valued. These stocks are Rayonier Inc. (NYSE:RYN), Urban Outfitters, Inc. (NASDAQ:URBN), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and Texas Roadhouse Inc (NASDAQ:TXRH). This group of stocks’ market caps are similar to EGO’s market cap.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $508 million. That figure was $112 million in EGO’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Rayonier Inc. (NYSE:RYN) is the least popular one with only 15 bullish hedge fund positions. Eldorado Gold Corp (USA) (NYSE:EGO) is not the least popular stock in this group but hedge fund interest is still below average and it has less money invested in it than any of the other four stocks. This is a negative signal and we’d rather spend our time researching stocks that hedge funds are investing a lot of money in. In this regard TTWO might be a better candidate to consider a long position in.

Disclosure: None