You might know it, but you have hundreds of unpaid interns pitching you investment ideas. And these aren’t a bunch of college kids- they’re hedge funds and other major investors, many of whom are billionaires. The investing public has access to many of their long stock positions through quarterly 13F filings. While the information in these filings is a bit old, it doesn’t cost anything to take a look and we’ve found that it’s possible to use 13Fs to develop investment strategies; in fact, the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy) and our own portfolio based on these results outperformed the S&P 500 by 33 percentage points in the last 11 months.
We can also go through our database of filings to choose different categories of stocks and see which funds are hedge fund favorites in these spaces, to help investors find interesting names worthy of further research. Using data from Fidelity as well as our database, here are the five most popular stocks among hedge funds which currently pay a dividend yield of at least 3%, have a market capitalization of at least $2 billion, and which are down at least 10% year to date:
Leading our list is $17 billion market cap gold miner Newmont Mining Corp (NYSE:NEM). Gold prices have slumped so far this year, and the poorer business has forced the company to cut its quarterly dividend to 25 cents per share. The combination of these factors has sent Newmont Mining Corp (NYSE:NEM)’s stock price down about 30% so far in 2013. The dividend cut has been by about the same percentage as this fall in the price, and so Newmont Mining Corp (NYSE:NEM) still pays a yield of 3% at current prices. Billionaire David Shaw’s D.E. Shaw more than doubled the size of its position in Newmont Mining Corp (NYSE:NEM) last quarter. George Soros was a little bit cautious about the stock, initiating a large put options position during the second quarter.
Iron Mountain Incorporated (NYSE:IRM) dived about 20% in one day in early June after the company disclosed that the IRS may resist the company’s movements to convert to a real estate investment trust. REITs receive favorable tax treatment, this tax efficiency creates shareholder value, and markets had generally been expecting smooth sailing for the company’s approval. The difficulties for the conversion process have therefore been bad news for the stock. At present the records management and document destruction company pays a yield of 4%, though judging by high earnings multiples it looks like a decent chance of REIT conversion is still priced in at Iron Mountain Incorporated (NYSE:IRM). Jonathan Jacobson has a large position in the stock.