Is RGLD Stock A Buy or Sell?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Royal Gold, Inc (NASDAQ:RGLD).

Is RGLD stock a buy? Royal Gold, Inc (NASDAQ:RGLD) investors should be aware of a decrease in hedge fund interest lately. Royal Gold, Inc (NASDAQ:RGLD) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 30. There were 30 hedge funds in our database with RGLD holdings at the end of September. Our calculations also showed that RGLD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 encompassing Royal Gold, Inc (NASDAQ:RGLD).

Do Hedge Funds Think RGLD Is A Good Stock To Buy Now?

At the end of December, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in RGLD a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the largest position in Royal Gold, Inc (NASDAQ:RGLD). Renaissance Technologies has a $67.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $44.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise D. E. Shaw’s D E Shaw, Eric Sprott’s Sprott Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to Royal Gold, Inc (NASDAQ:RGLD), around 2.48% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, dishing out 1.47 percent of its 13F equity portfolio to RGLD.

Due to the fact that Royal Gold, Inc (NASDAQ:RGLD) has experienced falling interest from the smart money, it’s safe to say that there were a few funds who sold off their positions entirely by the end of the fourth quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest position of the 750 funds monitored by Insider Monkey, totaling about $7.3 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dropped its stock, about $1.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds by the end of the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Royal Gold, Inc (NASDAQ:RGLD) but similarly valued. These stocks are Cleveland-Cliffs Inc (NYSE:CLF), Lemonade, Inc. (NYSE:LMND), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Pearson PLC (NYSE:PSO), Huntington Ingalls Industries Inc (NYSE:HII), GrubHub Inc (NYSE:GRUB), and Fiverr International Ltd. (NYSE:FVRR). All of these stocks’ market caps resemble RGLD’s market cap.

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As you can see these stocks had an average of 21.9 hedge funds with bullish positions and the average amount invested in these stocks was $515 million. That figure was $284 million in RGLD’s case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 5 bullish hedge fund positions. Royal Gold, Inc (NASDAQ:RGLD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGLD is 58.8. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately RGLD wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on RGLD were disappointed as the stock returned 10.8% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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