Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards B2Gold Corp (NYSE:BTG) to find out whether there were any major changes in hedge funds’ views.
Is BTG a good stock to buy now? B2Gold Corp (NYSE:BTG) investors should be aware of a decrease in hedge fund sentiment lately. B2Gold Corp (NYSE:BTG) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. Our calculations also showed that BTG 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 15 best blue chip stocks 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. With all of this in mind let’s go over the recent hedge fund action regarding B2Gold Corp (NYSE:BTG).
Do Hedge Funds Think BTG Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BTG over the last 21 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of B2Gold Corp (NYSE:BTG), with a stake worth $275.9 million reported as of the end of September. Trailing Renaissance Technologies was Sprott Asset Management, which amassed a stake valued at $112.5 million. GLG Partners, Arrowstreet Capital, and Two Sigma Advisors were 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 Sun Valley Gold allocated the biggest weight to B2Gold Corp (NYSE:BTG), around 9.31% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, earmarking 4.61 percent of its 13F equity portfolio to BTG.
Due to the fact that B2Gold Corp (NYSE:BTG) has experienced bearish sentiment from hedge fund managers, we can see that there exists a select few funds that slashed their positions entirely by the end of the third quarter. Intriguingly, Donald Sussman’s Paloma Partners dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling close to $3.4 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dropped its stock, about $0.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to B2Gold Corp (NYSE:BTG). These stocks are American Well Corporation (NYSE:AMWL), Omega Healthcare Investors Inc (NYSE:OHI), Sensata Technologies Holding plc (NYSE:ST), Pan American Silver Corp. (NASDAQ:PAAS), ADT Inc. (NYSE:ADT), Acceleron Pharma Inc (NASDAQ:XLRN), and Dunkin Brands Group Inc (NASDAQ:DNKN). This group of stocks’ market values are similar to BTG’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 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $572 million. That figure was $583 million in BTG’s case. Sensata Technologies Holding plc (NYSE:ST) is the most popular stock in this table. On the other hand Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks B2Gold Corp (NYSE:BTG) is even less popular than OHI. Our overall hedge fund sentiment score for BTG is 30.8. 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 BTG. 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 30.7% in 2020 through December 14th but managed to beat the market again by 15.8 percentage points. Unfortunately BTG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BTG investors were disappointed as the stock returned -16.7% since the end of the third quarter (through 12/14) 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.