In this article we will check out the progression of hedge fund sentiment towards U.S. Global Investors, Inc. (NASDAQ:GROW) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in U.S. Global Investors, Inc. (NASDAQ:GROW) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare GROW to other stocks including Pioneer Power Solutions, Inc. (NASDAQ:PPSI), ZK International Group Co., Ltd. (NASDAQ:ZKIN), and Unit Corporation (NYSE:UNT) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the latest hedge fund action encompassing U.S. Global Investors, Inc. (NASDAQ:GROW).
How have hedgies been trading U.S. Global Investors, Inc. (NASDAQ:GROW)?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in GROW a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in U.S. Global Investors, Inc. (NASDAQ:GROW), which was worth $1.1 million at the end of the third quarter. On the second spot was Invenomic Capital Management which amassed $0.2 million worth of shares. Renaissance Technologies 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 Invenomic Capital Management allocated the biggest weight to U.S. Global Investors, Inc. (NASDAQ:GROW), around 0.13% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to GROW.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as U.S. Global Investors, Inc. (NASDAQ:GROW) but similarly valued. These stocks are Pioneer Power Solutions, Inc. (NASDAQ:PPSI), ZK International Group Co., Ltd. (NASDAQ:ZKIN), Unit Corporation (NYSE:UNT), and Aethlon Medical, Inc. (NASDAQ:AEMD). All of these stocks’ market caps match GROW’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 2.25 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $1 million in GROW’s case. Unit Corporation (NYSE:UNT) is the most popular stock in this table. On the other hand ZK International Group Co., Ltd. (NASDAQ:ZKIN) is the least popular one with only 1 bullish hedge fund positions. U.S. Global Investors, Inc. (NASDAQ:GROW) is not the most popular stock in this group but hedge fund interest is still above 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on GROW as the stock returned 86.4% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.