Is Tahoe Resources Inc (NYSE:TAHO) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Tahoe Resources Inc (NYSE:TAHO) was in 13 hedge funds’ portfolios at the end of September. TAHO has seen a decrease in hedge fund sentiment of late. There were 15 hedge funds in our database with TAHO positions at the end of the previous quarter. Our calculations also showed that TAHO isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s check out the latest hedge fund action regarding Tahoe Resources Inc (NYSE:TAHO).
What have hedge funds been doing with Tahoe Resources Inc (NYSE:TAHO)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in TAHO over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, John Burbank’s Passport Capital has the most valuable position in Tahoe Resources Inc (NYSE:TAHO), worth close to $13.8 million, accounting for 28.9% of its total 13F portfolio. On Passport Capital’s heels is Greywolf Capital Management, led by Jonathan Savitz, holding a $11.2 million position; 4.4% of its 13F portfolio is allocated to the company. Other peers that hold long positions consist of Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.
Due to the fact that Tahoe Resources Inc (NYSE:TAHO) has witnessed a decline in interest from the smart money, logic holds that there were a few money managers who sold off their positions entirely last quarter. Interestingly, Phill Gross and Robert Atchinson’s Adage Capital Management dumped the largest position of the 700 funds monitored by Insider Monkey, totaling close to $7.4 million in stock. Mario Gabelli’s fund, GAMCO Investors, also sold off its stock, about $0.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tahoe Resources Inc (NYSE:TAHO) but similarly valued. These stocks are Innophos Holdings, Inc. (NASDAQ:IPHS), Blackrock Resources & Commodities Strategy Trust (NYSE:BCX), Guaranty Bancorp (NASDAQ:GBNK), and Fate Therapeutics Inc (NASDAQ:FATE). All of these stocks’ market caps are closest to TAHO’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 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $33 million in TAHO’s case. Fate Therapeutics Inc (NASDAQ:FATE) is the most popular stock in this table. On the other hand Blackrock Resources & Commodities Strategy Trust (NYSE:BCX) is the least popular one with only 3 bullish hedge fund positions. Tahoe Resources Inc (NYSE:TAHO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FATE might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.