Is Sierra Metals Inc. (SMTS) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Sierra Metals Inc. (NYSE:SMTS).

Sierra Metals Inc. (NYSE:SMTS) investors should be aware of an increase in enthusiasm from smart money in recent months. Sierra Metals Inc. (NYSE:SMTS) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SMTS 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 today’s marketplace there are plenty of formulas stock market investors can use to evaluate publicly traded companies. A duo of the less known formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform their index-focused peers by a significant amount (see the details here).


Leon Cooperman of Omega Advisors

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 let’s take a glance at the latest hedge fund action regarding Sierra Metals Inc. (NYSE:SMTS).

Hedge fund activity in Sierra Metals Inc. (NYSE:SMTS)

Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SMTS over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Leon Cooperman’s Omega Advisors has the largest position in Sierra Metals Inc. (NYSE:SMTS), worth close to $1.2 million, accounting for 0.1% of its total 13F portfolio. On Omega Advisors’s heels is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Omega Advisors allocated the biggest weight to Sierra Metals Inc. (NYSE:SMTS), around 0.12% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.0001 percent of its 13F equity portfolio to SMTS.

As one would reasonably expect, key money managers have jumped into Sierra Metals Inc. (NYSE:SMTS) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the largest position in Sierra Metals Inc. (NYSE:SMTS). Two Sigma Advisors had $0.1 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Sierra Metals Inc. (NYSE:SMTS). These stocks are Gold Resource Corporation (NYSE:GORO), American Renal Associates Holdings, Inc (NYSE:ARA), TELA Bio, Inc. (NASDAQ:TELA), Eiger BioPharmaceuticals, Inc. (NASDAQ:EIGR), Value Line, Inc. (NASDAQ:VALU), Astronics Corporation (NASDAQ:ATRO), and NVE Corporation (NASDAQ:NVEC). This group of stocks’ market caps are similar to SMTS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GORO 4 1738 -3
ARA 5 130082 0
TELA 7 75777 -2
EIGR 26 87225 0
VALU 2 2198 0
ATRO 21 50971 -2
NVEC 9 16734 0
Average 10.6 52104 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $1 million in SMTS’s case. Eiger BioPharmaceuticals, Inc. (NASDAQ:EIGR) is the most popular stock in this table. On the other hand Value Line, Inc. (NASDAQ:VALU) is the least popular one with only 2 bullish hedge fund positions. Sierra Metals Inc. (NYSE:SMTS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SMTS is 38.1. 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 SMTS as the stock returned 93.9% 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.