Is Golden Star Resources Ltd. (USA) (GSS) A Good Stock To Buy?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: GRT Capital Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was “Citadel Investment Group).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS) but similarly valued. These stocks are Marrone Bio Innovations Inc (NASDAQ:MBII), Aptose Biosciences Inc (NASDAQ:APTO), Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX), and Profire Energy, Inc. (NASDAQ:PFIE). This group of stocks’ market values match GSS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MBII 4 4106 -1
APTO 6 5295 0
CYTX 4 1254 -2
PFIE 5 2535 0

As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million.That figure was $2 millions in GSS’s case. Aptose Biosciences Inc (NASDAQ:APTO) is the most popular stock in this table. On the other hand Marrone Bio Innovations Inc (NASDAQ:MBII) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Golden Star Resources Ltd. (USA) (NYSEAMEX:GSS) is even less popular than MBII. Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.