At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Gold Fields Limited (NYSE:GFI) makes for a good investment right now.
Is GFI a good stock to buy now? Gold Fields Limited (NYSE:GFI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds’ portfolios at the end of September. Our calculations also showed that GFI 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). 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 Molina Healthcare, Inc. (NYSE:MOH), Citizens Financial Group Inc (NYSE:CFG), and The Boston Beer Company Inc (NYSE:SAM) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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. Now let’s view the new hedge fund action surrounding Gold Fields Limited (NYSE:GFI).
Do Hedge Funds Think GFI Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GFI over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Gold Fields Limited (NYSE:GFI), worth close to $202.8 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $80.7 million position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish encompass Cliff Asness’s AQR Capital Management, Eric Sprott’s Sprott Asset Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Gold Fields Limited (NYSE:GFI), around 2.39% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, dishing out 1.03 percent of its 13F equity portfolio to GFI.
Judging by the fact that Gold Fields Limited (NYSE:GFI) has experienced a decline in interest from the smart money, it’s safe to say that there were a few funds that elected to cut their full holdings in the third quarter. Intriguingly, Peter Franklin Palmedo’s Sun Valley Gold dropped the largest position of all the hedgies followed by Insider Monkey, valued at close to $17.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $7.1 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Gold Fields Limited (NYSE:GFI). We will take a look at Molina Healthcare, Inc. (NYSE:MOH), Citizens Financial Group Inc (NYSE:CFG), The Boston Beer Company Inc (NYSE:SAM), RPM International Inc. (NYSE:RPM), MGM Resorts International (NYSE:MGM), Avalara, Inc. (NYSE:AVLR), and Avery Dennison Corporation (NYSE:AVY). This group of stocks’ market valuations match GFI’s market valuation.
|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 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $844 million. That figure was $509 million in GFI’s case. Avalara, Inc. (NYSE:AVLR) is the most popular stock in this table. On the other hand Avery Dennison Corporation (NYSE:AVY) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Gold Fields Limited (NYSE:GFI) is even less popular than AVY. Our overall hedge fund sentiment score for GFI is 25.5. 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 GFI. 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 GFI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); GFI investors were disappointed as the stock returned -29.5% 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.