We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Hycroft Mining Holding Corporation (NASDAQ:HYMC).
Is HYMC a good stock to buy now? Hycroft Mining Holding Corporation (NASDAQ:HYMC) investors should be aware of an increase in support from the world’s most elite money managers of late. Hycroft Mining Holding Corporation (NASDAQ:HYMC) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 10. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 7 hedge funds in our database with HYMC holdings at the end of June. Our calculations also showed that HYMC 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing Hycroft Mining Holding Corporation (NASDAQ:HYMC).
Do Hedge Funds Think HYMC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 86% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HYMC 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.
More specifically, Mudrick Capital Management was the largest shareholder of Hycroft Mining Holding Corporation (NASDAQ:HYMC), with a stake worth $221.8 million reported as of the end of September. Trailing Mudrick Capital Management was Whitebox Advisors, which amassed a stake valued at $101.6 million. Mudrick Capital Management, Valueworks LLC, and 683 Capital Partners 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 Mudrick Capital Management allocated the biggest weight to Hycroft Mining Holding Corporation (NASDAQ:HYMC), around 57.45% of its 13F portfolio. Mudrick Capital Management is also relatively very bullish on the stock, dishing out 4.27 percent of its 13F equity portfolio to HYMC.
As aggregate interest increased, some big names were leading the bulls’ herd. Scoggin, managed by Curtis Schenker and Craig Effron, assembled the biggest position in Hycroft Mining Holding Corporation (NASDAQ:HYMC). Scoggin had $1.2 million invested in the company at the end of the quarter. Bart Baum’s Ionic Capital Management also initiated a $0.3 million position during the quarter. The other funds with new positions in the stock are Nick Thakore’s Diametric Capital, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Hycroft Mining Holding Corporation (NASDAQ:HYMC) but similarly valued. These stocks are Radius Health Inc (NASDAQ:RDUS), Yintech Investment Holdings Limited (NASDAQ:YIN), Mitek Systems, Inc. (NASDAQ:MITK), Universal Electronics Inc (NASDAQ:UEIC), Aptose Biosciences Inc (NASDAQ:APTO), 89bio, Inc. (NASDAQ:ETNB), and Nordic American Tankers Ltd (NYSE:NAT). This group of stocks’ market caps match HYMC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $354 million in HYMC’s case. Radius Health Inc (NASDAQ:RDUS) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 3 bullish hedge fund positions. Hycroft Mining Holding Corporation (NASDAQ:HYMC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HYMC is 66.3. 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 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately HYMC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HYMC investors were disappointed as the stock returned -34% since the end of September (through 12/8) 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.
Disclosure: None. This article was originally published at Insider Monkey.