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 Metalla Royalty & Streaming Ltd. (NYSE:MTA).
Is Metalla Royalty & Streaming Ltd. (NYSE:MTA) a buy, sell, or hold? Prominent investors were taking a pessimistic view. The number of long hedge fund bets fell by 1 in recent months. Metalla Royalty & Streaming Ltd. (NYSE:MTA) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 4. Our calculations also showed that MTA 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). There were 4 hedge funds in our database with MTA holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are viewed as unimportant, outdated investment tools of yesteryear. While there are over 8000 funds in operation at the moment, We look at the bigwigs of this club, about 850 funds. Most estimates calculate that this group of people handle the lion’s share of the hedge fund industry’s total asset base, and by tracking their first-class picks, Insider Monkey has uncovered many investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year 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 10 most profitable companies in the world 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 new hedge fund action regarding Metalla Royalty & Streaming Ltd. (NYSE:MTA).
What does smart money think about Metalla Royalty & Streaming Ltd. (NYSE:MTA)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in MTA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Metalla Royalty & Streaming Ltd. (NYSE:MTA) was held by Renaissance Technologies, which reported holding $1.3 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $0.9 million position. The only other hedge fund that is bullish on the company was Millennium Management.
Judging by the fact that Metalla Royalty & Streaming Ltd. (NYSE:MTA) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there were a few hedgies who sold off their positions entirely heading into Q4. Interestingly, Eric Sprott’s Sprott Asset Management dumped the largest investment of all the hedgies monitored by Insider Monkey, worth about $0.3 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Metalla Royalty & Streaming Ltd. (NYSE:MTA). These stocks are Global Indemnity Group, LLC (NASDAQ:GBLI), Titan Machinery Inc. (NASDAQ:TITN), Pulse Biosciences, Inc (NASDAQ:PLSE), Flushing Financial Corporation (NASDAQ:FFIC), Motorcar Parts of America, Inc. (NASDAQ:MPAA), IMV Inc. (NASDAQ:IMV), and Spark Energy, Inc. (NASDAQ:SPKE). All of these stocks’ market caps match MTA’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 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $3 million in MTA’s case. Titan Machinery Inc. (NASDAQ:TITN) is the most popular stock in this table. On the other hand Pulse Biosciences, Inc (NASDAQ:PLSE) is the least popular one with only 2 bullish hedge fund positions. Metalla Royalty & Streaming Ltd. (NYSE:MTA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTA is 30.7. 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. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on MTA as the stock returned 11.2% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.