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Is First Majestic Silver Corp (AG) Going to Burn These Hedge Funds?

Is First Majestic Silver Corp (NYSE:AG) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is First Majestic Silver Corp (NYSE:AG) a bargain? Money managers are taking a bearish view. The number of bullish hedge fund bets dropped by 1 recently. To the investors who are in the know, it may not come a surprise, as the shares of First Majestic Silver Corp (NYSE:AG) were down 33.75% during the quarter. In order to find out more about the hedge fund sentiment, we decided to cover hedge funds that held stake in the company, at the end of the last 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 Intrawest Resorts Holdings Inc (NYSE:SNOW), Ladenburg Thalmann Financial Services (NYSEMKT:LTS), and Student Transportation Inc (NASDAQ:STB) to gather more data points.

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In the eyes of most shareholders, hedge funds are viewed as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at present, our researchers look at the aristocrats of this group, approximately 700 funds. These hedge fund managers command most of the smart money’s total capital, and by keeping an eye on their top equity investments, Insider Monkey has spotted several investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, we’re going to take a look at the recent action regarding First Majestic Silver Corp (NYSE:AG).

Hedge fund activity in First Majestic Silver Corp (NYSE:AG)

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 11% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Vertex One Asset Management, managed by John Thiessen, holds the number one position in First Majestic Silver Corp (NYSE:AG). Vertex One Asset Management has a $6.7 million position in the stock, comprising 0.9% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $3.4 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions comprise Eric Sprott’s Sprott Asset Management, Ken Griffin’s Citadel Investment Group, and Renaissance Technologies.

Since First Majestic Silver Corp (NYSE:AG) has experienced a declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few money managers who sold off their full holdings by the end of the third quarter. Intriguingly, David Costen Haley’s HBK Investments sold off the largest position of all the hedgies monitored by Insider Monkey, comprising about $0.9 million in stock. Cliff Asness’ fund, AQR Capital Management, also dropped its stock, about $0.3 million worth of shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 fund by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to First Majestic Silver Corp (NYSE:AG). We will take a look at Intrawest Resorts Holdings Inc (NYSE:SNOW), Ladenburg Thalmann Financial Services (NYSEMKT:LTS), Student Transportation Inc (NASDAQ:STB), and Celyad SA (ADR) (NASDAQ:CYAD). All of these stocks’ market caps match First Majestic Silver Corp (NYSE:AG)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNOW 16 260726 -2
LTS 5 1240 -1
STB 6 3116 2
CYAD 4 11183 -2

As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $14 million in First Majestic Silver Corp (NYSE:AG)’s case. Intrawest Resorts Holdings Inc (NYSE:SNOW) is the most popular stock in this table. On the other hand, Celyad SA (ADR) (NASDAQ:CYAD) is the least popular one with only 4 bullish hedge fund positions. First Majestic Silver Corp (NYSE:AG) 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, Intrawest Resorts Holdings Inc (NYSE:SNOW) might be a better candidate to consider a long position.

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