Is Silvercorp Metals Inc. (SVM) A Good Stock To Buy?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Silvercorp Metals Inc. (NYSE:SVM) based on that data.

Silvercorp Metals Inc. (NYSE:SVM) was in 5 hedge funds’ portfolios at the end of March. SVM has experienced a decrease in hedge fund interest in recent months. There were 8 hedge funds in our database with SVM positions at the end of the previous quarter. Our calculations also showed that SVM isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

According to most investors, hedge funds are viewed as slow, old financial vehicles of the past. While there are over 8000 funds trading at present, Our experts hone in on the crème de la crème of this club, around 850 funds. These money managers handle the majority of the hedge fund industry’s total asset base, and by observing their inimitable stock picks, Insider Monkey has unearthed numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed 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 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the latest hedge fund action regarding Silvercorp Metals Inc. (NYSE:SVM).

What have hedge funds been doing with Silvercorp Metals Inc. (NYSE:SVM)?

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in SVM a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

The largest stake in Silvercorp Metals Inc. (NYSE:SVM) was held by Renaissance Technologies, which reported holding $24.4 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $3.9 million position. Other investors bullish on the company included D E Shaw, Sprott Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Silvercorp Metals Inc. (NYSE:SVM), around 0.13% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to SVM.

Seeing as Silvercorp Metals Inc. (NYSE:SVM) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there were a few hedge funds that slashed their full holdings in the first quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest stake of the “upper crust” of funds monitored by Insider Monkey, comprising about $14.3 million in stock. Donald Sussman’s fund, Paloma Partners, also sold off its stock, about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds in the first quarter.

Let’s now review hedge fund activity in other stocks similar to Silvercorp Metals Inc. (NYSE:SVM). These stocks are Bryn Mawr Bank Corp. (NASDAQ:BMTC), Urstadt Biddle Properties Inc (NYSE:UBA), NOW Inc (NYSE:DNOW), and TORM plc (NASDAQ:TRMD). This group of stocks’ market values resemble SVM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BMTC 10 32250 1
UBA 8 26170 2
DNOW 19 55284 -2
TRMD 4 419530 1
Average 10.25 133309 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $32 million in SVM’s case. NOW Inc (NYSE:DNOW) is the most popular stock in this table. On the other hand TORM plc (NASDAQ:TRMD) is the least popular one with only 4 bullish hedge fund positions. Silvercorp Metals Inc. (NYSE:SVM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on SVM as the stock returned 35.2% during the second quarter and outperformed the market by an even larger margin.

Follow Silvercorp Metals Inc. (NYSE:SVM)

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