Pretium Resources Inc (PVG) Fell Out Of Favor With Hedge Funds?

In this article we will take a look at whether hedge funds think Pretium Resources Inc (NYSE:PVG) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Hedge fund interest in Pretium Resources Inc (NYSE:PVG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that PVG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The RealReal, Inc. (NASDAQ:REAL), Eagle Bancorp, Inc. (NASDAQ:EGBN), and Greatbatch Inc (NYSE:GB) to gather more data points.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to check out the key hedge fund action surrounding Pretium Resources Inc (NYSE:PVG).

Do Hedge Funds Think PVG Is A Good Stock To Buy Now?

At the end of June, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PVG over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is PVG A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Sprott Asset Management, managed by Eric Sprott, holds the most valuable position in Pretium Resources Inc (NYSE:PVG). Sprott Asset Management has a $41.9 million position in the stock, comprising 2.4% of its 13F portfolio. Coming in second is Sun Valley Gold, managed by Peter Franklin Palmedo, which holds a $39.9 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions consist of John Paulson’s Paulson & Co, Roberto Mignone’s Bridger Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Pretium Resources Inc (NYSE:PVG), around 2.45% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, setting aside 2.17 percent of its 13F equity portfolio to PVG.

Judging by the fact that Pretium Resources Inc (NYSE:PVG) has witnessed bearish sentiment from hedge fund managers, we can see that there was a specific group of fund managers that slashed their full holdings heading into Q3. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cut the biggest investment of all the hedgies watched by Insider Monkey, comprising close to $3.2 million in stock, and Lee Ainslie’s Maverick Capital was right behind this move, as the fund dropped about $0.8 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Pretium Resources Inc (NYSE:PVG) but similarly valued. We will take a look at The RealReal, Inc. (NASDAQ:REAL), Eagle Bancorp, Inc. (NASDAQ:EGBN), Greatbatch Inc (NYSE:GB), Replimune Group, Inc. (NASDAQ:REPL), Genetron Holdings Limited (NASDAQ:GTH), Aurora Cannabis Inc. (NASDAQ:ACB), and GoPro Inc (NASDAQ:GPRO). This group of stocks’ market values are similar to PVG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
REAL 26 342792 2
EGBN 15 21945 2
GB 13 1481829 -3
REPL 13 268698 0
GTH 14 179124 2
ACB 9 62764 -3
GPRO 28 413732 -8
Average 16.9 395841 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $154 million in PVG’s case. GoPro Inc (NASDAQ:GPRO) is the most popular stock in this table. On the other hand Aurora Cannabis Inc. (NASDAQ:ACB) is the least popular one with only 9 bullish hedge fund positions. Pretium Resources Inc (NYSE:PVG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PVG is 65.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on PVG as the stock returned 18.3% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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