Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Fury Gold Mines Limited (NYSE:AUG).
Is Fury Gold Mines (AUG) a good stock to buy now? The smart money was turning bullish. The number of bullish hedge fund positions improved by 2 recently. Fury Gold Mines Limited (NYSE:AUG) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AUG 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.
To most market participants, hedge funds are perceived as unimportant, old investment tools of years past. While there are over 8000 funds in operation today, Our experts hone in on the masters of this group, around 850 funds. Most estimates calculate that this group of people have their hands on the majority of the smart money’s total asset base, and by keeping an eye on their matchless picks, Insider Monkey has brought to light a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. Keeping this in mind we’re going to take a peek at the recent hedge fund action regarding Fury Gold Mines Limited (NYSE:AUG).
How are hedge funds trading Fury Gold Mines Limited (NYSE:AUG)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the second quarter of 2020. By comparison, 3 hedge funds held shares or bullish call options in AUG a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Fury Gold Mines Limited (NYSE:AUG) was held by Corriente Advisors, which reported holding $2.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.7 million position. Other investors bullish on the company included Two Sigma Advisors, Sprott Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Corriente Advisors allocated the biggest weight to Fury Gold Mines Limited (NYSE:AUG), around 1.14% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to AUG.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Fury Gold Mines Limited (NYSE:AUG) headfirst. Corriente Advisors, managed by Mark Hart III, created the most valuable position in Fury Gold Mines Limited (NYSE:AUG). Corriente Advisors had $2.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.3 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Fury Gold Mines Limited (NYSE:AUG) but similarly valued. We will take a look at Priority Technology Holdings, Inc. (NASDAQ:PRTH), StarTek, Inc. (NYSE:SRT), Southern National Bancorp of Virginia, Inc (NASDAQ:SONA), Energy Fuels Inc (NYSE:UUUU), Nathan’s Famous, Inc. (NASDAQ:NATH), Falcon Minerals Corporation (NASDAQ:FLMN), and Oasis Midstream Partners LP (NASDAQ:OMP). This group of stocks’ market caps resemble AUG’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 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $4 million in AUG’s case. Falcon Minerals Corporation (NASDAQ:FLMN) is the most popular stock in this table. On the other hand Priority Technology Holdings, Inc. (NASDAQ:PRTH) is the least popular one with only 2 bullish hedge fund positions. Fury Gold Mines Limited (NYSE:AUG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AUG is 45.3. 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. 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 20 most popular stocks among hedge funds 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 November 27th and surpassed the market again by 16.1 percentage points. Unfortunately AUG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AUG investors were disappointed as the stock returned -54% since the end of September (through 11/27) 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.