The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Perpetua Resources Corp. (NASDAQ:PPTA) based on those filings.
Is PPTA a good stock to buy? Hedge funds were getting more optimistic. The number of bullish hedge fund positions advanced by 3 recently. Perpetua Resources Corp. (NASDAQ:PPTA) was in 3 hedge funds’ portfolios at the end of March. Our calculations also showed that PPTA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Paulson of Paulson & Co
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the key hedge fund action encompassing Perpetua Resources Corp. (NASDAQ:PPTA).
Do Hedge Funds Think PPTA Is A Good Stock To Buy Now?
At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in PPTA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Paulson & Co held the most valuable stake in Perpetua Resources Corp. (NASDAQ:PPTA), which was worth $159.9 million at the end of the fourth quarter. On the second spot was Sun Valley Gold which amassed $7.6 million worth of shares. Two Sigma Advisors was 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 Paulson & Co allocated the biggest weight to Perpetua Resources Corp. (NASDAQ:PPTA), around 3.67% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, setting aside 2.72 percent of its 13F equity portfolio to PPTA.
Consequently, key hedge funds were leading the bulls’ herd. Paulson & Co, managed by John Paulson, initiated the most outsized position in Perpetua Resources Corp. (NASDAQ:PPTA). Paulson & Co had $159.9 million invested in the company at the end of the quarter. Peter Franklin Palmedo’s Sun Valley Gold also initiated a $7.6 million position during the quarter. The only other fund with a new position in the stock is John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to Perpetua Resources Corp. (NASDAQ:PPTA). These stocks are Opko Health Inc. (NASDAQ:OPK), AeroVironment, Inc. (NASDAQ:AVAV), Stepan Company (NYSE:SCL), First Interstate Bancsystem Inc (NASDAQ:FIBK), Group 1 Automotive, Inc. (NYSE:GPI), Kennedy-Wilson Holdings Inc (NYSE:KW), and MorphoSys AG (NASDAQ:MOR). This group of stocks’ market valuations are similar to PPTA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OPK | 15 | 29181 | -1 |
| AVAV | 16 | 137175 | 0 |
| SCL | 10 | 28771 | -2 |
| FIBK | 14 | 22745 | 3 |
| GPI | 26 | 304299 | 6 |
| KW | 16 | 499333 | 0 |
| MOR | 2 | 4465 | -1 |
| Average | 14.1 | 146567 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $168 million in PPTA’s case. Group 1 Automotive, Inc. (NYSE:GPI) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 2 bullish hedge fund positions. Perpetua Resources Corp. (NASDAQ:PPTA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PPTA is 11.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on PPTA as the stock returned 41.8% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.