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Is Gold Resource Corporation (GORO) Going to Burn These Hedge Funds?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Gold Resource Corporation (NYSE:GORO) based on that data.

Gold Resource Corporation (NYSE:GORO) was in 6 hedge funds’ portfolios at the end of March. GORO has seen an increase in activity from the world’s largest hedge funds lately. There were 5 hedge funds in our database with GORO holdings at the end of the previous quarter. Our calculations also showed that GORO isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding

David Harding of Winton Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the key hedge fund action regarding Gold Resource Corporation (NYSE:GORO).

How are hedge funds trading Gold Resource Corporation (NYSE:GORO)?

Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in GORO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Sprott Asset Management was the largest shareholder of Gold Resource Corporation (NYSE:GORO), with a stake worth $1.5 million reported as of the end of September. Trailing Sprott Asset Management was Winton Capital Management, which amassed a stake valued at $0.7 million. Renaissance Technologies, Citadel Investment Group, and Citadel Investment Group 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 Sprott Asset Management allocated the biggest weight to Gold Resource Corporation (NYSE:GORO), around 0.14% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to GORO.

Consequently, some big names have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the largest position in Gold Resource Corporation (NYSE:GORO). Two Sigma Advisors had $0.1 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gold Resource Corporation (NYSE:GORO) but similarly valued. These stocks are Donnelley Financial Solutions, Inc. (NYSE:DFIN), CapStar Financial Holdings, Inc. (NASDAQ:CSTR), Cabaletta Bio, Inc. (NASDAQ:CABA), and Tecnoglass Inc. (NASDAQ:TGLS). This group of stocks’ market caps match GORO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DFIN 18 27554 -4
CSTR 10 7454 5
CABA 9 69313 2
TGLS 5 6805 0
Average 10.5 27782 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $3 million in GORO’s case. Donnelley Financial Solutions, Inc. (NYSE:DFIN) is the most popular stock in this table. On the other hand Tecnoglass Inc. (NASDAQ:TGLS) is the least popular one with only 5 bullish hedge fund positions. Gold Resource Corporation (NYSE:GORO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on GORO as the stock returned 48.4% during the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.