Is Yamana Gold Inc. (USA) (AUY) A Gold Producer Worth Investing In?

Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Yamana Gold Inc. (USA) (NYSE:AUY) and see how the stock has been affected by the recent hedge fund activity.

Jeroen van den Broek/

Jeroen van den Broek/

Yamana Gold Inc. (USA) (NYSE:AUY) investors should be aware of a decrease in support from the world’s most elite money managers in recent months, as ownership of the stock among the top hedge funds in our database has fallen to 16. At the end of this article we will also compare Yamana Gold Inc. (USA) (NYSE:AUY) to other stocks including Matthews International Corp (NASDAQ:MATW), Inc (NASDAQ:SOHU), and Celestica Inc. (NYSE:CLS) to get a better sense of its popularity.

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To most traders, hedge funds are assumed to be underperforming, outdated investment tools of yesteryear. While there are more than 8,000 funds in operation today, experts at hedge fund tracking site Insider Monkey look at the masters of this group, about 700 funds. These investment experts manage the bulk of all hedge funds’ total asset base, and by monitoring their inimitable picks, Insider Monkey has identified many investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in its backtests.

Keeping this in mind, we’re going to take a look at the recent action regarding Yamana Gold Inc. (USA) (NYSE:AUY).

How have hedgies been trading Yamana Gold Inc. (USA) (NYSE:AUY)?

Heading into Q4, a total of 16 of the hedge funds tracked by Insider Monkey were long in this stock, a decline of 6% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

When looking at the hedgies followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Yamana Gold Inc. (USA) (NYSE:AUY). Adage Capital Management has a $22.1 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $7.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Jim Simons’ Renaissance Technologies, Peter Franklin Palmedo’s Sun Valley Gold, and Israel Englander’s Millennium Management.

Since Yamana Gold Inc. (USA) (NYSE:AUY) has witnessed falling interest from the smart money, we can see that there exists a select few fund managers that slashed their entire stakes heading into Q4. Intriguingly, John Overdeck and David Siegel’s Two Sigma Advisors cut the largest position of the 700 funds tracked by Insider Monkey, comprising an estimated $2.3 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also cut its stock, about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by one fund heading into Q4.

Let’s also review hedge fund activity in other stocks similar to Yamana Gold Inc. (USA) (NYSE:AUY). These stocks are Matthews International Corp (NASDAQ:MATW), Inc (NASDAQ:SOHU), Celestica Inc. (USA) (NYSE:CLS), and Old National Bancorp (NYSE:ONB). This group of stocks’ market values are closest to Yamana Gold Inc. (USA) (NYSE:AUY)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MATW 13 73124 4
SOHU 17 436859 -6
CLS 12 16772 -5
ONB 8 22015 0

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. Only $53 million was invested in Yamana Gold, accumulating 3.3% of the company’s shares. Inc (NASDAQ:SOHU) is the most popular stock in this table. On the other hand Old National Bancorp (NYSE:ONB) is the least popular one with only eight bullish hedge fund positions. Yamana Gold Inc. (USA) (NYSE:AUY) 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 pouring money into. In this regard Inc (NASDAQ:SOHU) might be a better candidate to consider a long position in.